Rising home prices are sending first-time homebuyers to their parents for help with mortgage down payments, The Wall Street Journal reports.
More than 26% of mortgage borrowers who used Federal Housing Administration-insured loans got assistance from a relative to make the down payment in the 12 months through September, up from about 22% in 2011, according to data released late last year as part of the agency’s annual report.
The FHA, an arm of the Department of Housing and Urban Development, insures lenders against losses on the sometimes riskier loans they make. Borrowers taking out FHA loans are predominantly buying homes for the first time and often have weaker credit profiles that make it more difficult for them to get a conventional loan. It makes sense these borrowers might need to ask for financial help, but the FHA is keeping an eye on whether the share doing so keeps rising.
While conventional mortgages can require buyers to put down as much as 20% of the purchase price upfront, FHA buyers can pay as little as 3.5%. Such loans make up about a 10th of all U.S. home-loan originations, a share that has declined in recent years. Read the full story.