Freddie Mac is introducing a $2,500 credit for low-income families aimed at easing down payment and closing costs for potential homebuyers.
Recognizing that down payment and closing costs remain significant barriers to homeownership for very low-income homebuyers, Freddie Mac's move aims to provide crucial support.
Effective March 1, 2024, this credit will be available to very low-income borrowers who meet specific criteria and are earning 50% or less of the area median income while purchasing a home. These funds can be utilized for various purposes, including down payments, closing costs, escrow, and mortgage insurance premiums. The credit will be applicable across Freddie Mac's Home Possible® and HFA Advantage® mortgage products.
Freddie Mac's announcement follows what it describes as a successful 2023, during which the company financed approximately 800,000 home purchases. First-time homebuyers accounted for about 51% of these purchases, marking the highest percentage in three decades.
"This new effort continues the progress we made in 2023 and is particularly important in today’s housing market, where elevated rates and low supply have created affordability challenges for many families," Sonu Mittal, senior vice president and head of Single-Family Acquisitions at Freddie Mac, said. "We look forward to announcing additional ways to support low-income borrowers in the months ahead.”
The credit will be accessible through Freddie Mac's Home Possible mortgage product, which offers options and credit flexibility to help very low- to low-income borrowers achieve homeownership with a minimum down payment of just 3%. It will also be available through Freddie Mac's HFA Advantage mortgage product, exclusively offered to housing finance agencies (HFAs) seeking responsible ways to expand homeownership.
This initiative is part of Freddie Mac's ongoing commitment to making homeownership more attainable for low-income families. Additionally, Freddie Mac recently unveiled DPA One, a free, innovative tool designed to streamline and showcase down payment assistance programs on a single platform. This tool simplifies access for lenders while providing program providers with enhanced visibility and real-time updates, contributing to a smoother homebuying process for all parties involved.