Your Lake of the Ozarks Mortgage Lender: Home Buyers Can Now Qualify for 3% Down Payments

Friday, December 12, 2014

Home Buyers Can Now Qualify for 3% Down Payments

The largest obstacle for most home buyers is the amount of money they need for a down payment. In hopes of broadening the pool of home buyers and boosting the real estate market, Fannie Mae and Freddie Mac have both announced new home loan options that require as little as 3% down. These new options make it easier for first-time home buyers, as well as low-income home buyers to purchase a new home at the Lake of the Ozarks!

Fannie Mae

Fannie Mae's goal is to help additional qualified buyers gain access to mortgages. The 97 percent loan-to-value (LTV) ration option will expand access to credit for qualified first-time home buyers that may not have the resources for a larger down payment. These loans will still meet Fannie Mae's usual eligibility requirements, including underwriting, income documentation and risk management standards. These loans will also require private mortgage insurance, as is required on any loans above 80 percent LTV.

Fannie Mae states that this option alone won't solve all the challenges around access to credit. However, this is simply one way they are working to remove barriers for creditworthy borrowers to get a mortgage. They are confident that these new loan options will be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers. For more information on Fannie Mae's plans for this new loan program, visit: http://www.fanniemae.com/

Freddie Mac

Freddie Mac's Home Possible Advantage mortgage program is for low and moderate-income borrowers with limited savings, including first-time buyers. Generally, you will need to meet minimum credit requirements, earn no more than 100% of your area median income and have the funds to meet the down payment requirements and closing costs. First-time home buyers must also participate in an acceptable borrower education program, like the CreditSmart program by Freddie Mac.

Home Possible Advantage mortgages can also be used for a "no cash out" refinance of an existing mortgage and is available in 15, 20 and 30 year fixed-rate terms. Freddie Mac says that the keys to responsible lending are responsible underwriting and product design. They designed Home Possible Advantage with the appropriate credit underwriting requirements for today's market. The program has tougher credit standards than low down payment mortgages of the past, including lower DTI ratios, fixed-rate terms and requires full documentation, owner-occupation and housing counseling. For more information on the program, visit: www.freddiemac.mwnewsroom.com

Both companies say that as long as their underwriting standards stay the same, and the total volume of loans is relatively small, the low down payment loans don't add too much risk to their business. To learn more about how this could affect your options for a new home loan at the Lake of the Ozarks, contact me at 573-746-7211. As your Lake of the Ozark mortgage lender, I am dedicated to working with you every step of the way!

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