3% Down Payment Fannie Mae Program
As I discussed on Tuesday, Fannie Mae and Freddie Mac have announced they will begin offering 3% down payment conventional mortgage loans. This is a big win for homebuyers, as it opens up a whole new avenue for home purchase for those with small down payments but who are ready and qualified in every other way. But there are specific requirements to qualify for these new loans, and each agency has very specific regulations around each. Today, I will discuss Fannie Mae’s guidelines.
The new Fannie Mae program goes live this weekend. The primary qualification for this program is that you have not owned a primary residence for at least three years. In addition, you will be able to take out up to $2,000 from the home’s equity to help cover closing costs. Aside from that $2,000, however, you will not be able to ever draw the equity out of the house. So if you buy a house under this program today and in 20 years you have $400,000 in equity, you will be required to refinance your mortgage to access that equity. Finally, you will be required to obtain mortgage insurance.
So while there are a few small caveats, the program overall is an incredible opportunity for homebuyers. You are not required to get PMI from the FHA, which is one of the most expensive mortgage insurance options on the market, and there are not upfront fees associated, as there are with FHA. You get all of the accessibility of a FHA loan without all of the associated fees and hoops to jump through.
So if you are interested in buying a house but have been sitting on the sidelines because of down payment issues, please contact me and I will help you understand your options. If you have anything to add about this new Fannie Mae program, please leave a comment.