Fannie Mae is calling it "My Community Mortgage", and Freddie Mac is calling it "Home Possible Advantage". Those are the names for the new 3% 
down payment loan products that will be insured or purchased by the GSEs in the near future. Guidelines were rolled out yesterday and reported in an article in Mortgage News Daily for December 8, 2014.
The loan products will be subject to the same underwriting guidelines for the most part as conventional loans that are sold to the GSEs or are insured by the GSEs. The loans are limited to fixed rate loans encumbering only single family residential properties, excluding manufactured homes. In addition, at least one borrower must be a first-time home buyer, and all borrowers must participate in homeowner education.
The programs will include refinancings with only limited or no cash out. Secondary loans are allowed provided that the combined LTV does not exceed 105% of the property's value. PMI is required
Fannie will make its program available beginning December 13, 2014. Freddie will not have its product available until March 23, 2015.
Freddie was a bit more specific about its requirements for the loan product. 
Freddie will require a minimum credit score of 660 for purchase loans and 680 for no cash out refinancings. DTI ratio cannot exceed 43%.
Both GSEs feel their new products will make home ownership more readily available than it is without the new products. The 3% down payment loans have been available previously in various parts of the country, mostly available through state finance housing authorities.
Traditionally, these lower down payment loans have been used by people who have high credit scores and substantial incomes. As the loans are limited to borrowers that include at least one first-time home buyer, it will certainly be worth watching for any difference that these new loan products may make in the housing market. Whether a significant number of millennials will qualify is yet to be seen, obviously.
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