Wednesday, February 04, 2015

Return of the 3% Down Payment

From The Wall Street Journal's Market Watch:
It is getting easier for some buyers to land a house with less money up front. More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Many had been requiring down payments of at least 20% since the recession began.
Some lenders also are waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family.

The deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment. They are often targeted at buyers who live in expensive housing markets, where even a small down payment can equal tens of thousands of dollars.

 Fannie Mae’s plan was effective December 13, 2014 while the Freddie Mac plan will be available March 23, 2015.

Despite criticisms from some Republicans that the loosening federal home loan policies signal a return to the sub prime era, mortgage experts point out that credit requirements will remain very strict: "....low down payments have NOTHING to do with failed mortgages, In fact low down payments have helped homeowners hang on to their homes by allowing them to keep more of their money for emergencies."

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