Posted on April 18, 2015 - 02:12 PM
by Paul Brenot
WASHINGTON – March 19, 2015 – Freddie Mac will begin offering mortgages with downpayments of only 3 percent – the first time they've been this low on the GSE's loans in nearly five years – starting March 23. The move is expected to make more credit available to entry-level borrowers.
"By launching our 3 percent downpayment mortgage now, at the start of the spring home buying season, lenders will be ready to serve qualified working families who are ready to buy and keep the recovery going," writes Dave Lowman, executive vice president for Freddie Mac's single-family business, on its Executive Perspectives blog.
Fannie Mae began insuring 3 percent down payment mortgages in December.
The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, recently said it wanted to make it a priority to "work to increase access to mortgage credit for creditworthy borrowers," according to FHFA's 2015 Scorecard for Freddie Mac. Tight credit conditions and high downpayment requirements in recent years have been blamed for sidelining potential homebuyers and causing a sluggish housing recovery.
Besides 3 percent downpayments, Freddie Mac's Our Home Possible Advantage Program, aimed at supporting first-time buyers as well as low- and moderate-income borrowers, is allowing no minimum from borrowers in contributions. That means parents or relatives can now cover 100 percent of the downpayment through gifts.
Source: "Advantage: Home Buyers," Freddie Mac (March 9, 2015)