The 3-Percent Downpayment: Making Home Purchases More Affordable for Many Americans

homebuyingIn an effort to help the average homebuyer save hundreds of dollars, the federal government, along with two government-backed mortgage giants Freddie Mac and Fannie Mae, made recent policy changes that would enable home loan borrowers to purchase homes with a downpayment as low as 3%.

Nela Richardson, chief economist at real estate brokerage Redfin, asserts, “These combined actions between the FHA, Freddie Mac and Fannie Mae are a huge signal to the market that it’s OK to lend to first-time homebuyers.”

The loans are guaranteed by the Federal Housing Administration (FHA). This program, where the mortgage insurance premium is 0.85% lower, is best for those with good credit, stable income and the capacity to pay their loans, but have little cash saved.

Read the article: Making it less costly for first-time homebuyers | USA Today