New Loan Options Allow Only 3 Percent Down

Wednesday, December 24, 2014

Qualified home seekers who don't have a big down payment saved can now buy a home with as little as 3 percent of a home's purchase price. 

This news came from recent announcements by both Fannie Mae (FNMA) and Freddie Mac (FHLMC), the two biggest government-sponsored home loan entities. 

What prompted these programs?

Since income growth has not kept pace with rising home prices, some potential buyers have found it difficult saving
for large down payments. Federal Housing Finance Agency (FHFA) Director Mel Watt said, "These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound
lending practices." 

While effective dates and other terms vary among the programs, there are three key similarities. These loans:

  • Offer fixed rates
  • Are reserved for primary, owner-occupied residences
  • Require full documentation of income, credit and assets

These new loans will also offer refinancing provisions to existing homeowners. 

If you or anyone you know is interested in learning about these loan programs, please get in touch. I'm always happy to answer any questions you may have. 

Sources:,, Fannie Mae Release December 8, 2014, Freddie Mac Publication 572