FHFA to Loosen Rules on Mortgages, Offer Lower Down Payment Options

• October 21, 2014
• 4 Comments

by Lark Turner

In an effort to give more first-time buyers and low-to-middle income earners a better chance to buy a house at low rates, the Federal Housing Finance Agency announced on Monday a plan to loosen rules on mortgages.

“We know that access to credit remains tight for many borrowers, and we are also working to address this issue in a responsible and thoughtful manner,” Melvin Watt, the director of the FHFA, said in a speech at the Mortgage Bankers Association Annual Convention.

As part of the changes, the FHFA said it would create specific guidelines for mortgages with loan-to-value ratios between 95-and-97 percent to “increase access for creditworthy but lower-wealth borrowers.” While Watt’s speech did not offer much in the way of specifics, it has been reported that the new plan, to be outlined in the coming weeks, could allow for down payments as low as 3 percent for certain borrowers.

“Through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account ‘compensating factors,’” Watt said.

This article originally published at https://dc.urbanturf.com/articles/blog/fhfa_to_loosen_rules_on_mortgages/9119

4 Comments

1. Paul S said at 9:52 pm on Tuesday October 21, 2014:
   Uggh. While I think 20% down is on the high side, only putting 3% down is a joke. If you can't manage to save AT LEAST 5-10% for a down payment you aren't really ready to be a homeowner...

1. Andi said at 5:19 pm on Wednesday October 22, 2014:
   I disagree. I purchased my home with a 100% loan (before the market crashed), but had a credit score in the 800s. I had nothing saved but was in great shape financially. But I do think you need to have great credit and solid income.

1. monademarkpv said at 8:19 pm on Wednesday October 22, 2014:
   I agree that having some skin in the game if your credit isn't great has to be part of it. If you have great credit (>750) then you have proven yourself financially and a small down payment shouldn't be a big deal. Watch what happens to that great credit if you don't make those payments

1. Brett said at 6:31 pm on Thursday October 23, 2014:
   Wow, the gov't and financial industry learned nothing from the last housing market collapse. Not only are the banks lowering the minimum credit scores, but now this?