Skip to main content

GSEs Announce Changes in Downpayment Requirements

Phil Hall
Dec 08, 2014

The Federal Housing Finance Agency (FHFA) has officially launched new lending guidelines that will enable the government-sponsored enterprises (GSEs) to offer three percent downpayments on mortgages.

Mel Watt, director of the FHFA, initially previewed this change in GSE lending during the Mortgage Bankers Association’s annual convention in October. In a press statement released today by the FHFA, Watt affirmed that these changes are now in effect.

“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with three percent down,” said Matt. “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices. To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness. In addition, the new offerings will also include homeownership counseling, which improves borrower performance.  FHFA will monitor the ongoing performance of these loans.”

Freddie Mac announced its new three percent downpayment change under the banner of “Home Possible Advantage.” Dave Lowman, executive vice president of single-family business at Freddie Mac, called the program a “responsible path to homeownership and lenders a new tool for reaching eligible working families ready to own a home of their own.”

Fannie Mae also announced the change, albeit without a special banner, though the GSE stressed that this should not be seen as a be-all/end-all solution.  

“This option alone will not solve all the challenges around access to credit,” said Andrew Bon Salle, Fannie Mae’s executive vice president for single family underwriting, pricing and capital markets. “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.”

Published
Dec 08, 2014
Finance of America To Acquire Assets of AAG

The transaction is expected to close in the first half of 2023.

Industry News
Dec 07, 2022
Fairway Offers Down Payment Assistance To Some First-Time Buyers

The Fairway Community Access program is limited to specific majority-minority communities.

Industry News
Dec 07, 2022
RMF: Payments Going Out In The Next 24 Hours

Company filed for Chapter 11 bankruptcy last week.

Industry News
Dec 06, 2022
Bankruptcy Court Approves RMF Requests

Payments to reverse mortgage borrowers to resume.

Industry News
Dec 05, 2022
Redfin Adds Zoning Data For More Than 70M Homes

Real estate brokerage teamed with Zoneomics to educate buyers on zoning implications.

Industry News
Dec 05, 2022
Guild Mortgage Acquires Inlanta Mortgage

Guild CEO says acquisition is part of broader plans to expand nationwide.

Industry News
Dec 02, 2022