Fannie Mae and Freddie Mac have released new lending guidelines designed to allow homebuyers to purchase a home with a down payment of only 3 percent.
The underwriting guidelines are designed to help first-time homebuyers and other potential buyers with good credit but modest savings.
According to the guidelines, the buyer of a $300,000 home would need a down payment of $9,000.
“It’s just another tool we can use in our market to make homes more affordable,” said Pam Moore, deputy director of the Regional Housing Alliance in Durango.
The RHA offers a homebuyer education program that fulfills a requirement for the new program.
Education programs improve borrower performance, said Federal Housing Finance Agency Director Melvin Watt, in a Dec. 8 news release.
To take advantage of the loan program, one of the borrowers has to be a first-time homebuyer. The federal government defines a first-time homebuyer as someone who hasn’t owned a home in the past three years.
Government loans, such as loans backed by the Federal Housing Administration, or FHA, are often accompanied by hefty mortgage insurance payments, said Peter Pritchard, branch manager at Animas Mountain Mortgage.
FHA “used to be a common loan,” he said. “Now it’s a very uncommon loan because they’ve made it very expensive.”
The new program eases those costs, said Moore.
“You’re going to have a better mortgage insurance payment,” she said.
La Plata County homes sold for a median price of $336,200 in 2014, through September. That is far above the national average and prices some potential homebuyers out of the market.
Federal lenders said the new program will help ease the burden of a large down payment.
“The new lending guidelines ... will enable creditworthy borrowers who can afford a mortgage but lack the resources to pay a substantial down payment plus closing costs to get a mortgage with 3 percent down,” Watt said. “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”
In La Plata County, first-time homebuyers aren’t necessarily young families.
“We’re not just seeing young people,” Moore said. “We’re seeing people in their 40s and 50s who want to get in the market.”
cslothower@durangoherald.com
