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Do conventional loans have 3% down payment programs?

January 29th, 2016 by usdaadmin

Do conventional loans have 3% down payment programs?

For those of you who have not yet heard, both Fannie Mae and Freddie Mac conventional loans have 3% down payment programs available.

If you have not yet done so, don’t forget to take advantage of our Free 2nd opinion service, which is great for both existing transactions and any pre-qualifications who want an expert 2nd opinion.

With recent down payment reductions by both Fannie Mae and Freddie Mac, conventional loan programs have become more affordable.

Do conventional loans have 3% down payment programs?

It is common to associate 20% as the required down payment, but many do not realize that conventional loans have 3% down payment programs as well.conventional loans have 3% down payment programs

Fannie Mae (FNMA):

In addition to their traditional 3% down payment option, Fannie Mae has added another feature under their HomeReady™  program which is designed for creditworthy, low to moderate income borrowers, with expanded eligibility in designated areas.

Here are key highlights:

  1. Removal of any First Time Home Buyer requirement
  2. Income limits are applicable for certain areas
  3. Homeownership education is required through Framework, an online program approved by Fannie Mae.
  4. Gift funds allowed

Improved interest rate and mortgage insurance (PMI) adjustments are available with the HomeReady™ program, and while this does fall under the Fannie Mae conventional umbrella, there are more requirements involved –  so if you have questions call us for details.

conventional loans have 3% down payment programs

Freddie Mac (FHLMC):

Also don’t forget about the As of 3/23/15, Freddie Mac allows for a conventional 3% down payment through their Home Possible® Advantage Mortgages.  

  • While there is NO First Time Home Buyer Requirement, applicants may not have any other ownership interest in other residential properties at time of closing.
  • If applicants are considered a First Time Home Buyer, homebuyer education will be required which include Freddie Mac’s Credit Smart online training
  • Gift Funds are allowed – this is a new Freddie Mac improvement specific to Home Possible Advantage mortgages
  • Income Limits will apply 

Please remember that conventional loans have 3% down payment programs, but that minimum credit conditions will apply and sufficient equity will be required as on all programs.

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