Fannie Mae has announced that they will be reducing their down payment requirements from 5% to 3% starting in 2015. This 97% conventional mortgage program is also referred to as the “My Community Mortgage” program. There are many benefits to this new loan program including the following:
1) With only a 3% down payment, the My Community Mortgage is now comparable to an FHA loan which requires a 3.5% down payment.
2) Offers a lower monthly mortgage insurance premium compared to other conventional loan programs. This results in a lower monthly payment or more buying power.
3) Unlike FHA mortgage insurance, a homeowner can remove conventional mortgage insurance after they reach 20% equity.
4) Can be beneficial for homebuyers who lack a large down payment but have high credit scores.
Please visit the Fannie Mae website for more information.