We have recently
reported on the misconception that many buyers have
regarding the down payment necessary to purchase a home. Multiple studies
reveal that 40-50% of Americans believe you need between 15-20% of a down
payment to be eligible to purchase a home.
This misconception came about as the government just
last year debated new
guidelines for residential mortgages because of the housing
collapse in 2007. Some were arguing that there should be a minimum of 20% or
even 30% down payment on all mortgage loans. However, those standards
were never implemented.
To counter this misunderstanding, Christina Boyle, Freddie
Mac’s VP and Head of Single-Family Sales & Relationship Management, in
a recent Executive Perspectives
explained that a person “can get a conforming, conventional mortgage with a
down payment of as little as 5 percent”.
3%
Down Payments Available Soon?
Just last week, Federal Housing Finance Agency
Director Mel Watt announced that mortgages
requiring only a three percent down payment may soon be available:
“To
increase access for creditworthy but lower-wealth borrowers, FHFA is also
working with the Enterprises to develop sensible and responsible guidelines for
mortgages with loan-to-value ratios between 95 and 97 percent. Through these
revised guidelines, we believe that the Enterprises will be able to responsibly
serve a targeted segment of creditworthy borrowers with lower-down payment
mortgages by taking into account “compensating factors.”
Bottom
Line
If you are saving for either your first home or that
perfect move-up dream house, make sure you know all your options. You may be
pleasantly surprised.
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