Comment on You May Soon Need Less Of A Down-Payment To Buy A Home

You May Soon Need Less Of A Down-Payment To Buy A Home

(Robert Fairchild)One of the biggest hurdle’s to buying a home is coming up with a down-payment. In order to get a mortgage backed by Fannie Mae or Freddie Mac, you generally need to come up with at least 5% of the total cost. But the federal regulator overseeing Fannie and Freddie says it has reached a deal that would lower that minimum back down to 3% for some borrowers. In prepared remarks for a speech at the Mortgage Bankers Association Annual Convention in Las Vegas on Monday, Federal Housing Finance Agency Director Melvin Watt said his agency had reached an agreement in principle with Fannie and Freddie that would develop “sensible and responsible” guidelines for mortgage borrowers with as little as 3% to use as a down-payment. Fannie and Freddie buy mortgages from lenders and then bundle them up, turn them into securities and sell those securities off to investors. During the heyday of the housing bubble, a number of lenders misled Fannie and Freddie into believing they were buying mortgages that were not high-risk.

 

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