A new study from the Urban Institute concludes that the Federal Housing Administration (FHA) could offer zero-down payment mortgages to first-time homebuyers without significantly increasing default risk or endangering its insurance fund.

“Allowing zero-down payment mortgages would level the playing field for potential homeowners without family wealth,” the researchers wrote in the report. “Moreover, FHA zero-down payment loans would also replace the inconsistent patchwork of down payment assistance programs.”

Authored by Alexei Alexandrov, Laurie Goodman, Ted Tozer and Sam Valverde, the report reviews academic literature and loan-level data, finding that 0% down loans do not generate dramatically higher default risk when underwriting details ⇒

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