Fannie Mae 3% Down Payment Option Helps You Get That Home
Fannie Mae has announced their new option for qualified first-time homebuyers which will allow them to make a down payment as low at 3%. Offered through state Housing Finance Agencies, the 97 percent loan-to-value (LTV) option is aimed to expand access to credit for first-time buyers who may not have the resources to provide a larger, more traditional down payment.
Fannie Mae’s goal is to help qualified borrowers gain access to mortgages while breaking down the largest barrier in home buying: the down payment. Traditional mortgage down payments requirements are typically 10-20% of the total price of a property. A 3% down payment opens the door for many people, especially those who are younger and might not have the income or savings to front a larger percentage of the total price.
Major program benefits:
- Fixed-rate mortgage term up to 30 years
- No income limit
- Homebuyer counseling not required
- Reserves as required by underwriting guidelines may be gifted
This new program is a great opportunity for first-time home buyers (anyone who has never owned a home or has not owned in the last three years) because it allows for more flexibility in finding the home you want despite your financial position. Currently, there has been a movement in the millennial generation—people born roughly between the mid-80’s to mid-90’s—to purchase homes and stop renting. While this generation put off home owning for longer than previous generations, they have finally started to settle down with more permanence.
Borrowers will still have to meet Fannie Mae’s standard eligibility requirements like underwriting, income documentation, and risk management standards. However, this program is truly a game changer, providing flexible options for first-time home ownership.