Do conventional loans have 3% down payment programs?
Do conventional loans have 3% down payment programs?
For those of you who have not yet heard, both Fannie Mae and Freddie Mac conventional loans have 3% down payment programs available.
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With recent down payment reductions by both Fannie Mae and Freddie Mac, conventional loan programs have become more affordable.
Do conventional loans have 3% down payment programs?
It is common to associate 20% as the required down payment, but many do not realize that conventional loans have 3% down payment programs as well.
Fannie Mae (FNMA):
In addition to their traditional 3% down payment option, Fannie Mae has added another feature under their HomeReady™ program which is designed for creditworthy, low to moderate income borrowers, with expanded eligibility in designated areas.
Here are key highlights:
- Removal of any First Time Home Buyer requirement
- Income limits are applicable for certain areas
- Homeownership education is required through Framework, an online program approved by Fannie Mae.
- Gift funds allowed
Improved interest rate and mortgage insurance (PMI) adjustments are available with the HomeReady™ program, and while this does fall under the Fannie Mae conventional umbrella, there are more requirements involved – so if you have questions call us for details.
Freddie Mac (FHLMC):
Also don’t forget about the As of 3/23/15, Freddie Mac allows for a conventional 3% down payment through their Home Possible® Advantage Mortgages.
- While there is NO First Time Home Buyer Requirement, applicants may not have any other ownership interest in other residential properties at time of closing.
- If applicants are considered a First Time Home Buyer, homebuyer education will be required which include Freddie Mac’s Credit Smart online training
- Gift Funds are allowed – this is a new Freddie Mac improvement specific to Home Possible Advantage mortgages
- Income Limits will apply
Please remember that conventional loans have 3% down payment programs, but that minimum credit conditions will apply and sufficient equity will be required as on all programs.