According to a Fannie Mae policy statement released last month, its declining market flag calls for a lender to more closely examine whether the home's appraisal accurately reflects current market conditions. It also requires that borrowers who would otherwise have qualified for a loan with less than 20 percent down bump up their down payment by 5 percent. It doesn't affect borrowers making a down payment of 20 percent or more.
Since many first time home buyers do not have 20% down I have recommended FHA financing now that Fannie Mae has deemed most of Minnesota as a "decling marketplace." FHA loans are an excellent alternative to help a first time homebuyer get into the home they want. I have ssen many advantages to FHA financing now that the conventional market place has tightened up it's guidelines. The advantgaes include; lower mortgage insurance payments, lower interest rates, no credit requirement and lower closing costs. I do not seen any advantage to taking a first time home buyer to the conventional marketplace. Especially if their Loan to Value is over 80%.