Fannie Mae and Freddie Mac have announced that their minimum downpayment requirement for first time home buyers has been reduced to 3%.
Freddie Mac has a program called Home Possible Advantage which is a conventional mortgage program geared towards low and moderate income buyers. Buyers must participate in a mortgage borrower education program to qualify. Any buyer can utilize Fannie Mae's loan provided at least one co-borrower is a first time home buyer. Both programs require private mortgage insurance.
There is good news on the mortgage insurance front, as well. The Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums by .5 percentage points from 1.35% to .85%. This reduction in premium translates into roughly a $1,000 savings over one year on a $200,000 loan. The minimum downpayment requirement on an FHA loan is currently 3.5% of the purchase price. FHA insures approximately twenty percent of all mortgages.