3% Down Programs Are Making a Come Back

Despite mortgage rates falling slightly last week, hitting a 21-month low, mortgage applications remained relatively unchanged. So it appears that homebuyers might need more reason to get excited about jumping into the market than just low interest rates.

And now they have it, because the Mortgage Credit Availability Index (MCAI) rose nearly 1% from January to February—indicating a loosening of the mortgage credit available to buyers. This expansion of lending primarily stemmed from further growth of Fannie Mae’s 97% Loan-to-Value (LTV) products as well as a rise in jumbo loan programs.

In fact, according to a statement released by Mike Fratantoni, chief economist at the Mortgage Bankers Association, more than half of investors are now offering a 97% LTV program. And Freddie Mac just announced that its program will be available in mid-March.

These 97% LTV programs—like Freddie’s Home Possible Advantage and Fannie’s My Community Mortgage—are designed to assist buyers who may not be able to put more than 3% down on their property. These low down payment programs are gaining popularity now that mortgage standards are loosening slightly and credit availability is increasing.

So if you’re looking to purchase a home with a low amount out of pocket and take advantage of the increase in mortgage credit availability, contact your loan officer today to find out what programs are best suited for your needs.


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