Now that Fannie Mae is ending 3% down program. Are there other low down payment options besides FHA?
The good news is YES! Once Fannie closes their 97% LTV door many state Housing Finance Agencies will still continue to offer 97% programs, and it’s still a much better option for many buyers than the now grossly overpriced FHA loan.
Check with a good loan officer in your state for what is available in your area, but here in Minnesota, we have a great program available through the Minnesota Housing Finance Agency. Similar guidelines should be available in most states.
- 3% down payment
- Only 1% of the down payment must be the buyers own funds
- The remaining 2% down payment (3% total) & all closing costs can be gifted or paid by an approved community second or down payment assist program.
- Reduced mortgage insurance – Only .18% of the loan amount versus 1.35% of the loan amount for FHA
- No pricing adjustment for low credit scores. Someone with a 660 gets the same rate as someone with an 800 score.
- Homebuyer education classes required
As this is a bond down payment assistance program, there are additional income and other eligibility requirements.