Julia Ziegler says that to make a 20 percent down payment on the D.C. home she wants to buy, “I would have to save for a long, long time.” (JUANA ARIAS/FOR THE WASHINGTON POST)

Most home buyers put down less than 20 percent when they take out a mortgage, a sign of how hard it has become to scrape together enough cash to purchase a home. It’s especially tough in the pricey Washington area, where more than half of borrowers put down less than 10 percent.

Prospective home buyers may soon face a rude awakening.

Seeking to avoid a repeat of the foreclosure crisis, the Obama administration and regulators have proposed rules that are all but certain to boost the interest rates and fees on many low-down-payment loans. Only borrowers putting down 20 percent could get the best deals.

To buy a home for $170,000, the median national price, the borrower would have to come up with $34,000 in cash.

It takes the average middle-class family 14 years to save that much money and closing costs, according to the Center for Responsible Lending. That’s a steep hurdle even though 20 percent down was a common standard for most of an earlier generation.

Even with help from her parents, Julia Ziegler, 29, a social media specialist for a local company, would have to put down less than 20 percent on the $250,000 condominium she wants to buy in the District.

“Coming up with $25,000 plus closing costs is tough, and I’m buying in the lower end of the market,” Ziegler said. “If I had to put down 20 percent, if I needed $50,000, forget it. I would have to save for a long, long time.”

Repeat buyers worried

The federal proposal’s impact would extend beyond first-timers such as Ziegler to repeat buyers, who generally have counted on equity built up in one home to provide the down payment for the next. For people such as Gina Pecoraro, who saw the equity in her Sterling home erode, the housing bust has left little cash to put toward a new house.

Pecoraro and her husband were looking to move closer to the District. But they had to kick in $27,000 just to sell the house they were in, and then they had to stretch to come up with a 3.5 percent down payment on the home they want in Alexandria. Although they could have waited longer to save up more, Pecoraro said she didn’t want to take a chance on mortgage costs going up.

“We just thought: ‘Let’s do it. Let’s cut our losses and hope for the best in the future,’  ”Pecoraro said.

Last year, about six of 10 Washington area home buyers put down less than 20 percent, reflecting the national trend, according to research firm LPS Applied Analytics. The percentages were considerably larger in Prince George’s and Prince William counties — 86 percent and 79 percent, respectively.

Consumer activists and housing industry executives warn that the proposed rules would make homeownership much harder to achieve, particularly for first-time buyers and minorities, who have relied in great numbers on low-down-payments loans.

“Renters, by and large, have very little cash on hand, and minority renters have even less,” said Barry Zigas, housing policy director at the Consumer Federation of America. “Raising down payment barriers to a level that history tells us is neither necessary nor appropriate will foreclose homeownership opportunities for millions of families.”

In a recent report to Congress on the future of housing finance, the Obama administration said it was still committed to ensuring that Americans of modest means can buy homes. Although officials say they support some form of down payment assistance, they have yet to offer many specifics.

Ownership boom

Before the Great Depression, home buyers were often required to put down 50 percent or more on a home. But after the Depression and World War II, the government sought to stimulate the housing market and make it easy for returning veterans — and later all Americans — to buy homes by dramatically lowering down payment requirements. Buyers could put down 5 percent or less on loans offered through the Federal Housing Administration or other government agencies.

Then the nation’s homeownership rate soared, from 43.6 percent in 1940 to 64 percent in 1980, where it stayed for many years. “America was transformed from a nation of urban renters to suburban homeowners,” Richard Green of the University of Southern California and Susan Wachter of the University of Pennsylvania wrote in a study of the history of the American mortgage.

About 1980, the norm for down payments settled at 20 percent, but low-down-payment loans continued to be available for borrowers who met relatively strict criteria.

Then, as home prices soared at the start of the past decade, banks began to offer a new breed of low-down-payment — or no-down-payment — loans to a far wider range of borrowers, including many who were poor credit risks. Those mortgages were often linked to other risky lending practices, which contributed to the housing crisis.

“If people had put 20 percent down in 2005, if the law required it, the crisis would have been a lot milder than it turned out to be,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston.

So government officials now see raising down payments as a way to curtail shoddy and dishonest lending and to limit foreclosures if home prices decline. Under the standards proposed last month, a mortgage with a 20 percent down payment is deemed safe. In the case of mortgages with smaller down payments, banks would have to hold a stake in those loans rather than sell them off, a costly requirement that banks say would be passed on to borrowers in the form of higher interest rates and fees.

How high? Industry estimates range from a quarter-percentage point to two percentage points.

Some low-down-payment loans would still be available without the higher rates and fees through federal programs such as those offered by Fannie Mae, Freddie Mac and the FHA. But the administration has said it wants to eliminate Fannie and Freddie eventually and to shrink the FHA’s role. Any changes could take several years before the impact is fully felt.

The drawbacks

Critics of a 20 percent standard say regulators are shooting at the wrong target.

“Because of the low-down-payment loans, millions of low-to-moderate income families became successful homeowners,” Susanna Montezemolo, vice president of federal affairs at the Center for Responsible Lending, said in a recent analysis. “Mortgages generally performed well ... while expanding the middle class.”

Cameron Findlay, chief economist at the online brokerage Lending Tree, said that setting 20 percent as the standard would encourage lenders to chase after borrowers who have cash and to put less energy into offering services to those who don’t.

“The lower-income will be underserved,” Findlay said. “I would expect a heavy geographic influence to occur so that more lenders concentrate on the areas where there is higher wealth.”

Even federal officials proposing the standard acknowledge that many creditworthy borrowers will have trouble coming up with 20 percent. In seeking public comment, regulators asked whether the level should be set at 10 percent instead.

Some critics of the federal proposal say the size of a down payment is not by itself a good predictor of whether a borrower will pay off a mortgage. Some economists say low-down-payment loans carry relatively little risk if borrowers have enough income to cover their monthly mortgage costs, have a history of paying bills on time and take out a long-term mortgage with a fixed rate.

According to government data on loans made from 1997-2009, borrowers who met strong underwriting standards but made small down payments defaulted at a rate of 2.3 percent, about twice the rate of borrowers who met the same standards but put down 20 percent.

But the size of the down payment was a less-significant factor than credit history. The default rate rate on loans made to people with a poor history of paying bills on time — even if they put down 20 percent — was 4.7 percent.