New 3% Down Conventional Mortgage Programs
Fannie Mae and Freddie Mac have recently announced that they will begin backing conventional mortgages with as little as 3% down. This puts conventional mortgages into a new arena which they have not been in for almost 5 years, namely, the low down payment space.
Until the announcement on Monday, the lowest Fannie and Freddie would go was a 5% down payment; anything less and you were looking at FHA or VA. But now, you can keep looking at conventional options with lower down payments, which should help to keep costs down and mortgage insurance lower.
Each organization will have slightly different versions, but both target first time homebuyers and individuals with high credit scores. Fannie Mae and Freddie Mac are doing this to help stimulate and continue the housing resurgence of the last few years. If first time homebuyers are able to buy sooner due to the more lax regulations, that will help keep house values up.
So if you have been on the fence about buying a house due to the size of your down payment, now is a perfect time to talk about your options with a qualified mortgage officer. It might just be possible to buy the house of your dreams with a conventional mortgage, keeping the fees and interest rate down.
If you have any questions about this new program from Fannie Mae and Freddie Mac, or if you have any questions about a mortgage preapproval, please contact me. If you have anything to add about the new mortgages, please leave a comment.