Fannie Mac and Freddie Mac announced a new program, Home Possible Advantage, this week that allows a 3% minimum down payment for first time home buyers. One of the most popluar questions I get is "how much dow we have to put down". Many buyers have great credit and income but don't have 10 or 20% saved for a down payment. The FHA loan was always a great recommendation but now the playing field is opened up much more.
There are a few guidelines you should know about in advance; The loans are geared to low and moderate income borrowers, The maximum loan-to-value ratio is 97%, the loan will require PMI (FHA loans require for the life of loan, conventional usually goes away at 80/20 LTV, check with loan officer to be sure), and first time home buyers will have to complete a borrower education program.
This is still good news and there is nothing wrong with having educated buyers applying for loans. An Informed buyer makes sound decisions! Oh, and the GSE's have to cover their butts too, it's only fair.
In NY we need to be careful how much we talk about specific mortgage issues and loan products., It's great to know this info, mention to our clients, and direct them to a mortgage professional that can give them all the details.
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