3% Down Payment: New Program from Fannie and Freddie is Great News for Home Buyers

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Happy New Year everyone, and welcome back to the 2015 edition of our blog!

Fannie Mae and Freddie Mac have recently released some great news. They are stepping up to the plate to help first-time home buyers with a 3% down, 97% financing, program. Additionally, they are willing to be more flexible with credit scores and debt-to-income ratios. They are also now allowing down payments to be gifted by relatives to first-time home buyers applying for a loan.

This fantastic new program will allow first-time homeowners to get into the market now, while conditions are great. With home prices slated to rise in 2015, now may be the time to lock in a low rate. Renting is costing you more than it costs to own a home right now, so what's stopping you from exploring your buying options?

The Federal Housing Finance Agency (FHFA) has officially launched new lending guidelines that will enable the government-sponsored enterprises (GSEs) to offer 3% down-payments on mortgages. In a press statement released today by the FHFA, it was announced that these changes are now in effect.

“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 three percent down,” said Matt Watt, Director of FHFA. “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.“

Freddie Mac announced its new three percent down-payment change under the banner of “Home Possible Advantage.” Dave Lowman, executive vice president of single-family business at Freddie Mac, called the program a “responsible path to homeownership and lenders a new tool for reaching eligible working families ready to own a home of their own.”

Fannie Mae also announced the change, albeit without a special banner, though the GSE stressed that this should not be seen as a be-all/end-all solution.


“This option alone will not solve all the challenges around access to credit,” said Andrew Bon Salle, Fannie Mae’s executive vice president for single family underwriting, pricing and capital markets. “Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”

If you're interested in learning more about our market and the great programs out there for first-time home buyers, give The Mortgage Doctor a call. We would certainly love to hear from you!

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