Jennie Runevitch - Eyewitness News
INDIANAPOLIS -Home sales are down in Central Indiana.
FC Tucker says sales for March are down 17 percent, compared to last year.
Now, a new proposal out of Washington D.C. could make it even harder to buy a home: a required 20 percent down payment.
Realtors say that would send the already delicate housing market into a tailspin.
Holli Jackson is about to own a piece of the American dream.
"I'm very nervous. It's my first home, but I'm excited," Jackson said. "I'm excited about decorating, redoing it my own way."
After renting for years, Jackson saved and scraped for a down payment.
Like many first-time buyers, She put down 5 percent on a home.
"I just really have been putting all my money towards one account and just working on that," Jackson said.
But under new rules proposed by the Obama administration, Holli's down payment wouldn't be nearly enough.
Borrowers would have to put 20 percent down to get the best deals.
That means on a $170,000 home, the national median sales price, you'd have to come up with $34,000.
A $200,000 home would require 40 grand.
To buy a $300,000 home, you'd need $60,000 in cash.
FC Tucker predicts this proposal would make it hard for anyone to buy a home.
Last year, only 35 percent of its buyers could come up with that kind of cash.
"You know that's a lot of money. Very very few people have that," said FC Tucker Mortgage President Ron McGuire. "This would have a dramatic effect on the borrowers. Home sales obviously are going to go way down. You just won't have it. You just won't have real estate moving at all. It would just be a catastrophic event."
The government's goal is to avoid another mortgage meltdown.
But FC Tucker says down payments weren't the problem.
Bad loan programs were.
Now, McGuire says steps have been taken to prevent buyers getting in over their heads: income is verified and credit scores are scrutinized much more closely.
"Putting people in programs that should never have been in place put us in this mess. We're going from one pendulum if you're breathing you get a loan, to now, we're going to make it tighter and tighter and tighter," McGuire said.
In fact, that kind of money, requiring 20 percent down would have priced Holli Jackson right out of the market.
"I couldn't do it right away. Not at all. I don't think very many young people could do it," Jackson said.
The proposal could take effect as early as July.
If buyers put down less than 20 percent, they would face higher fees and interest rates from banks.
Realtors and mortgage brokers are lobbying Congress for change.
They want exemptions put in the plan for FHA and VA loans.
They say that would make things much easier on home buyers.
