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What You Need To Know About 3% Down Conventional Loans

By
Mortgage and Lending with Northpointe Bank - NMLS #709729 NMLS #709729

As most of you are likely aware by now.  Fannie Mae and Freddie Mac have just released information on the new 3% down conventional loan programs.  As with most mortgage programs the devil is in the details.  Here is a quick summary of the differences between the programs:

 

Fannie Mae:

  • Two programs exist.  
    • Standard 3% down Program (no income limits apply)
    • My Community Mortgage 3% down program (income limits apply)
  • No matter what program selected, at least one of the borrowers must be a first time homebuyer (cannot have owned a home in the last 3 years).  
  • The income limit for the My Community Mortgage in most areas of the country is 100% of the median income (can be found by going to this link)
  • At least one client must attend a first time homebuyer class if clients are using the My Community Mortgage (program with an income limit)
  • Clients using the My Community Program are eligible for a reduced mortgage insurance rate (benefit to meeting the income limit)
  • All of the down payment can be a gift.
  • Can be used to refinance an existing Fannie Mae loan
  • Available December 15th, 2015

 

Freddie Mac:

  • Only one program
  • Subject to the same income limits as the Fannie Mae My Community Program
  • At least one borrower must attend a first time homebuyer class when ALL of the borrowers are first time homebuyers.
  • Clients DO NOT have to be first time homebuyers but must meet the income limits in order to be eligible.
  • All of the down payment can be a gift.
  • Available March of 2015

As a direct seller to Fannie Mae and Freddie Mac, we will begin offering these programs as soon as they are available.  We are able to lend in a number of states.  Please contact us for more information.  We can be reached via our website at www.danmoralez.com or at 616-931-4629.

 

Comments(19)

June Piper-Brandon
Coldwell Banker Realty - Columbia, MD
Creating Generational Wealth Through Homeownership

This is very good information for buyers and their agents.  

Dec 11, 2014 12:39 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Thanks June.  I am hoping this will encourage more first time home buyers to purchase while rates are still low.  Happy Holidays!

Dec 11, 2014 12:47 AM
Ron Aguilar
Gateway Mortgage Group - Saint George, UT
Mortgage & Real Estate Advisor since 1995

make sure your marketing considers the facts to avoid confusion

Dec 11, 2014 02:06 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Thanks Ron.  That is why I wanted to put the information out there for agents.  There is a lot of misinformation going around already =)

Dec 11, 2014 02:08 AM
Liane Thomas, Top Listing Agent
Professional Realty Services® - Corona, CA
Bringing you Home!

I have been wondering what the "rules" were. Thank you for sharing and blessings to your business.

Dec 11, 2014 02:27 AM
Beth and Richard Witt
New York, NY
The best Retired Brokers !!!!

Welcome to the Rain Ron... and congratulations on a well earned featured post...

Dec 11, 2014 03:20 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Thanks Liane.  I hope the information is helpful. Happy Holidays!

Dec 11, 2014 03:38 AM
Karen Deis
ApartmentToolKit.com - Minneapolis, MN
When In-house training is not enough!

Freddie does not have a first-time homebuyer requirement.  The thing is that real estate agents could sell the home using a lender who sells to Freddie Mac, however, the loan could not be "closed" until March 23, 2015 (Delayed closing).

Dec 11, 2014 04:20 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I understand FHA still has higher DTI and lower credit score requirements, but I may be wrong.  If you can avoid FHA you should.

Dec 11, 2014 07:08 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Gene, you are correct.  FHA typically will take higher DTI and lower FICO's.  For borrowers short cash that are reasonably qualified this should be a nice improvement. 

Dec 11, 2014 11:59 AM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

According to a recent survey, the millennials are cohabiting but not getting married, not having children and renting their housing.

Additionally, more than 28% are now living with their parents, so the outlook in this demographic for real estate appears to be inconsequentially, doesn't it, regardless of the new FHA loan rules?

Dec 11, 2014 12:07 PM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Thanks for providing us with the details.  As many times as I've read about this new loan,  I've not seen the details.

Dec 11, 2014 03:16 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Dan, a great "primer" on these loans. Thanks for sharing the information in such a great way.

Dec 11, 2014 08:42 PM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Kimo, there is a lot of information on millennials.  Some of it tends to be conflicting.  I would agree that their perspective on housing is different then generations past.  With that being said, I am afraid that student loan debt is an even bigger problem for many would be homeowners.  In my opinion, student loan debt is the next bubble to burst. 

 

These new conventional programs will benefit those who have good credit and the ability to come up with the 3% down payment (whether it be from savings, gift or combination of the two).  For the most part, the biggest benefit is a lower overall cost to borrow vs. an FHA loan.

Dec 12, 2014 01:02 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

 Wow! This is definitely some pretty good information. Just hope we don't find ourselves going back to '08.

Dec 13, 2014 10:57 AM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Dan Moralez thanks for the information. I did not know of these programs for FHA.

Dec 15, 2014 04:02 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

John DL Arendsen thanks for the comment.  While nobody wants a repeat of the housing crisis, these changes should provide a much more reasonable cost of homeownership for well qualified buyers.  This is not a program that is aimed toward borrowers with bad credit.  This is a program for clients who are just short cash for a down payment.

 

Dec 16, 2014 10:33 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

Wayne Johnson keep in mind these are conventional loan programs and not FHA.  That is a good thing for a number of reasons =)

Dec 16, 2014 10:34 AM
Winston Heverly
Coldwell Banker Access Realty - South Macon, GA
GRI, ABR, SFR, CDPE, CIAS, PA

I think Active Rain has done a great job in bringing out the best potential in all of their members blogs like this one.

Mar 23, 2015 08:11 AM