Lower income and first-time home buyers have become a dwindling portion of the homebuying market. In an effort to reverse — or at least slow — this trend, government-backed Fannie Mae and Freddie Mac said Monday that they will bring back the 3% down payment mortgage.
Borrowers will, of course, still be required to meet a strict set of criteria. Namely, borrowers must have a credit score of 620, must buy private mortgage insurance, and must offer documentation for proof of income, assets, and job status. Moreover, the lending agencies will require borrowers to receive homeownership counseling.
The new programs are to be offered to first-time homebuyers and current home owners looking to refinance. The loans are fixed-rate and will be backed by Fannie Mae starting this Saturday, December 13, and by Freddie Mac on March 23, 2015.
In response to the move, the California Association of Realtors (C.A.R.) released a statement commending the move.
“C.A.R. commends Fannie Mae and Freddie Mac for expanding access to credit for well-qualified first-time buyers struggling to enter the housing market,” said C.A.R. President Chris Kutzkey. “Saving enough money for a down payment is the biggest hurdle for most first-time home buyers, but this program will help remove that barrier, and at the same time, lenders can be assured they are providing a safe, affordable loan to creditworthy borrowers.”
