2015 has again signaled the willingness of Fannie Mae and Freddie Mac to purchase loans with a 3% down payment. Until just recently, most mortgage brokers asked for a 5% down payment, unless you are in a USDA area. You could then apply for a VA loan, or your state offered local housing down payment assistant help.
FHA loan down payments, as I am aware of at this time, has as of today has not changed. FHA is still looking for buyers to bring a 3.5% down payment.
Now let’s clarify what this means for a buyer and here is a simple example:
You are looking to purchase a home and are planning to make an offer of $100,000. Here are the differences in down payments you need to have.
USDA and VA – 0$
Fannie Mae and Freddie Mac – $3,000
FHA – $3,500
The 3% Fannie Mae and Freddie Mac down payment loans do have a fine print.
The 3% is only for first-time homes buyers and it runs under their Home Possible Advantage program which is a conventional mortgage program with a maximum loan-to-value ratio of 97 percent. This means the first-time borrower has to bring the remaining 3%.
A first time home borrower also needs to prove that they have enough monthly income to afford the monthly mortgage payment. The 3% down payment is only good for borrowers who plan on living in the home. Over all, the borrowers must still meet the standard eligibility requirements, including underwriting, income documentation, and the banks risk management standards. For a couple, as long as one borrower is a first time home buyer, they can take advantage of the 3% down payment.
Help is just a phone call away
When you are ready to purchase you home and have question on what type of mortgage would be the right mortgage for you and your family, contact your local Bank, Credit Union, or Independent Mortgage broker. Any one of them can walk you through their options they offer through their institutions.
Make sure to shop around for the best options to you. Also check out our blog titled “The mortgage approval process is like an orchestra”. That will give you some tips on what will happen during a loan process.