The Federal Housing Administration (FHA) has concluded that its loan volume would have dipped by 40% in the next fiscal year and that 300,000 first-time home buyers would have been shut out of the housing market if it had raised its down payment requirements, as critics have pressured it to do, a top housing official plans to tell Congress on Thursday. Borrowers who take out loans backed by the FHA are permitted to put down as little as 3.5%. The agency's cash reserves have dwindled as defaults have climbed in recent years, creating concerns that taxpayers may ultimately have to come to FHA's rescue. The agency's critics say that boosting the amount of upfront cash that borrowers invest in their homes would make it less attractive for them to default on their loans and walk away from their properties, thereby lessening the chances of a taxpayer bailout. Rep. Scott Garrett (R-N.J.) introduced legislation last year that would have required FHA borrowers to put down at least 5%. FHA Commissioner David Stevens plans to tell a House subcommittee Thursday that such an increase could have undermined the housing market and led to a double-dip in home prices by vastly reducing the agency's loan volume. The Obama administration "determined after extensive evaluation that such a proposal would adversely impact the housing market recovery," Stevens said in prepared remarks submitted to a House Financial Services panel.