Fannie Mae changes down payment rules
Mortgage giant Fannie Mae, which in December began requiring higher down payments in markets it deemed to be declining, said today that it's scrapping that policy. Buyers of single-family homes will be able to put down as little as 3 percent nationwide.
That's for loans made to people who will occupy the homes they're buying and handled through Fannie's automated underwriting system. Loans underwritten in other ways will require 5 percent down.
Here's what the company says in a press release:
"As another part of our 'Keys to RecoveryTM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."
Fannie, a major player in the market because it buys and securitizes mortgages made by other lenders, said it can afford to make this change because its new model for automated underwriting "will limit risk layering and assess each loan more precisely."
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Comments
So I'm a little curious as to what this ultimately means for potential home buyers with only 3-5% down?
And how long will this ultimately take to work it's way to the consumers. My wife and I may have found a house we want to make an offer on and will have up to 5% but opted for an FHA option to have a little more in savings at closing.
Would the conventional with 3-5% down be a little more attractive to buyers than the traditional FHA?
Posted by: Potential buyer | May 17, 2008 7:10 AM
You might want to chat with a lender or broker about that, but the industry folks I talked to noted that a lot of mortgage companies have their own "declining market" policies and it might take a while for them to follow Fannie Mae's suit. Fannie Mae's new policy goes into effect June 1.
Of course, it's possible that FHA would work better for you even if the down payment requirements are apples-to-apples -- it's worth doing the comparison when the time has come, anyway.
Posted by: Jamie Smith Hopkins | May 17, 2008 8:10 AM