Low down payment mortgages are making a comeback. Previously the lowest down payment on a conventional conforming mortgage loan was 5%. Now even more potential homebuyers may qualify for a loan with just 3% down. Even though a low down payment loan requires mortgage insurance, this loan option provides potential first time homebuyers the chance to lock in a low interest rate, take advantage of affordable home prices, and start building equity.
This loan option isn’t just for first time homebuyers; Freddie Mac is allowing the low down payment loan for any borrower who meets its underwriting standards. Credit counseling will be required through Freddie, while only in certain cases through Fannie Mae.
The loan is for primary residences only and must be a fixed rate. Gift funds are accepted so even if you don’t have the 3% down payment yourself, you may qualify with a gift.