3% Down Payment Conventional Loan: Do I Qualify?

Conventional Loan

Gustan Cho Associates

Both Fannie Mae and Freddie Mac mission is not just to purchase mortgage loans from banks and mortgage companies but they also want to promote homeownership and want to make homeownership accessible to the average hard working family with access to credit for home buyers, especially first time home buyers.  One of the largest obstacles for home buyers today is the down payment required for a home purchase.  People can easily afford the monthly mortgage payments as well as their general monthly debt, however, coughing up the down payment is a major barrier for all home buyers today.  Those who dream of homeownership can have excellent credit, excellent income, but without the down payment and closing costs, they cannot proceed to the road of homeownership.  High costs of living these days have made saving almost impossible for many hard working Americans.  The great news is that the two mortgage giants, Fannie Mae and Freddie Mac, has brought the 3% down payment conventional loan program.  The 3% down payment conventional loan program was an extremely popular program but Fannie Mae and Freddie Mac discontinued it in 2014.  Currently, to qualify for a conventional loan, a minimum of a 5% down payment is required but now home buyers with 3% down payment can qualify for a conventional loan.  Conventional loan lending guidelines needs to be met by the home buyer.

Home Possible Advantage By Freddie Mac

Freddie Mac’s Home Possible Advantage program is offered to first time home buyers who participate in a housing counseling program.  It needs to be a single family and primary residential units only.  Mortgage insurance is mandatory.  On refinance conventional loans, no cash out refinance is allowed.

Fannie Mae 3% Down Payment Conventional Loan

Fannie Mae’s 3% down payment conventional loan program is available for first time home buyers only or home buyers who have not owned a primary property in the past 3 years.  No housing counseling is required like Freddie Mac except for the MyCommunityMortgage home purchases.  The 3% down payment conventional loan program is only available for owner occupant primary homes only and private mortgage insurance is mandatory.

Launch Of 3% Down Payment Conventional Loan

Fannie Mae has already launched the 3% down payment conventional loan program in December 13, 2014.  Freddie Mac is scheduled to launch the 3% down payment conventional loan program on March 23, 2015.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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