Republicans have a draft bill in the House that will raise the minimum down payment on FHA loans from 3.5% to 5%. Under the bill, the maximum FHA loan amount will drop way down to 125% of the median sale price in the county. I don't know what the median sale price in Pima County is, but the median sale price in April in the Tucson Multiple Listing Service, which includes all but the most rural parts of the county, was $132,000. In March it was $125,000. When FHA sets a loan limit based on median sale price, the loan limit sticks for quite a while, and does not adjust to market changes on a regular basis.
A housing expert says there is no evidence that an additional 1.5% down payment requirement will significantly decrease the default rate among FHA buyers. It could, however, decrease the pool of FHA buyers by 40%.
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