(Dec. 19, 2014) Fannie Mae recently announced an option for qualified first-time homebuyers that will allow for a down payment as low as 3 percent. Building upon Fannie Mae’s successful lower down payment program offered through state Housing Finance Agencies, the 97 percent loan-to-value ratio (LTV) option will expand access to credit for qualified first-time homebuyers that may not have the resources for a larger down payment.
These loans will meet Fannie Mae’s usual eligibility requirements. These loans will require private mortgage insurance or other risk sharing.
“Our goal is to help additional qualified borrowers gain access to mortgages,” Andrew Bon Salle, Fannie Mae executive vice president, said. “This option alone will not solve all the challenges around access to credit. Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”
Homebuyers can purchase a home under Fannie Mae’s standard offering or its MyCommunityMortgage product with a three-percent down payment if at least one co-borrower is a first-time buyer. In addition, eligible homeowners who wish to refinance their Fannie Mae-owned mortgage but do not qualify under the Home Affordable Refinance Program (HARP) can refinance their loan up to the 97 percent LTV level under a limited cash-out option.
In addition, Fannie Mae is making new tools available to help lenders better evaluate risk on loans. For example, early in 2015 the company will offer Collateral Underwriter, which gives lenders access to the same appraisal review tool that Fannie Mae uses.
— Lauren Bunting is a licensed realtor with Bunting Realty, Inc. serving Worcester and Wicomico counties.