Hoping to lure more first-time home buyers into the housing market, the government on Monday detailed its plan to offer government insured mortgages with a down payment of as little as 3 percent of the purchase price.
The proposal, first announced this October, is designed to help make mortgages more widely available to people who have a strong credit history but lack the cash for the standard 20 percent down payment.
Fannie Mae’s new My Community Mortgage program begins this week and is open only to first-time buyers with a minimum credit score of 620.
Freddie Mac’s new Home Possible Advantage mortgages, which begin in March, will be available to both first-time and other qualified borrowers. In most cases, credit scores will be just one of several factors in determining a home buyer’s eligibility.
Today, first-time home buyers account for just 29 percent of home sales, considerably lower than the historical rate of 40 percent, according to the National Association of Realtors.
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