Fannie Mae and Freddie Mac Introduce 3 Percent Down Payment Mortgage Options
Fannie Mae and Freddie Mac have just announced that they will start backing mortgages with down payments of as little as 3% of the home’s price.
Fannie Mae’s plan will be effective December 13, 2014 while the Freddie Mac plan will be available March 23, 2015. The director of FHFA, Mel Watt stated:
“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3% down. These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”
This is welcome news to the millions of potential homebuyers who have not been able to come up with the almost impossible down payment of 5-20% of the price of a home.
Who Is Eligible and What are the Requirements?
The Fannie Mae loans will still have the eligibility requirements that will include a credit score of at least 620, income verification, underwriting and standard risk management standards.
These loans will require private mortgage insurance as is required by the company whenever loan to value rate is greater than 80%.
Remember, as with any new program, there will be some confusion as it is unveiled. Contact a mortgage professional for a deeper understanding. Don’t have a mortgage person yet? Contact Finding Homes for You at 636-532-4200 for a referral. Here are the direct links to the programs:
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- Finding the right type of mortgage for you
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