On Monday (12/7/14), Fannie Mae and Freddie Mac announced that first-time home buyers can now qualify for loans with down payments as low as 3 percent. While NAR applauds the move by the Federal Housing Finance Agency, which oversees Fannie and Freddie, for ensuring responsible home buyers will have access to safe, affordable mortgage credit. Others worry that this is risky… do you think the past issue with high loan default was due to not enough “skin in the game” or less than 20% down? Others claim no, it was loans with no documentation / low fico score levels, or falling values in some major markets. Interesting discussion and we shall see the impact, but for right now, it has the potential of opening up new housing opportunities for some Berkshire buyers or turn renters into owners. The loan basics are as follows:
- Freddie Mac: Home Possible Advantage is a conventional mortgage with a 3 percent down-payment requirement geared to low- and moderate-income borrowers. It’s a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent. To qualify, first-time home buyers are required to participate in a borrower education program.
- Fannie Mae: 3 percent down-payment offering, borrowers must still meet standard eligibility requirements, including underwriting, income documentation, and risk management standards. Any buyer can take advantage of Fannie’s loans as long as at least one co-borrower is a first-time buyer. The loans will require private mortgage insurance.
Other recent articles from NAR about opening the credit box.
If you want to know more about these programs, contact a local mortgage professional for a information. I’m sure they would love to sit down and explain the options!