Low Down Money Down Mortgages

Low Down Payments are Making a Comeback

One of the biggest hurdles for many first-time-homebuyers, is coming up with the down payment. Recently, lenders have been making it easier for borrowers with less savings, to buy homes. Requirements for down payments are relaxing again as mortgage backers and federal government programs are attracting new home buyers.

FHA Insurance Costs Drop

The Federal Housing Administration has long ensured loans for home owners with low credit scores, offering low down payments. Yet, until 2015 there have also been strict insurance requirements. Insurance premiums for FHA loan have dropped considerably. These premiums have dropped from 1.35%, all the way down to .85%. Many believe that hefty insurance premiums were backlash from attitudes that stemmed from the housing crisis of 2008-2009. Now lenders are offering more reasonable insurance premiums for those who previously had high payments.

Easier Credit Requirements

Some politicians and analysts have criticized the loosening of credit requirement, warning that easy credit loans with small down payments were the cause of the housing crisis. But new rules for mortgage loans and more careful underwriting by the lenders will help protect the market.

Fannie Mae and Freddie Mac Mortgages

Freddie Mac and Fannie Mae back more than 50% of the country’s mortgages. At the end of 2014, both companies announced that they were cutting minimum down payments from 5% to 3%. Freddie Mac will begin distributing this mortgage product in March, while Fannie May has already put these loans into effect. These loans are for first-time buyers or homeowners looking to refinance their mortgage. The Freddie Mac program that kicks off in March, will be for low income home buyers with restricted income.

VA and USDA Rural Loans

Both of these types of loans give borrowers low down payments. USDA rural loans are backed by the US Department of Agriculture. USDA rural are not just for farmers, in fact, many of these loans are given to borrowers in areas that are barely considered rural. To obtain one of these loans, you need good credit, and a dependable source of income, and meet property and income requirements.

VA loans are selling like hotcakes, quickly approaching the number of FHA loans given annually. VA mortgage backing gives veterans and surviving spouses to buy homes with no money down, low insurance costs, and reduced closing costs. Credit and income requirements for VA loans are more flexible than traditional home loans.