It may not seem like it, but the start of spring is just a few days away, which means that the housing market will soon be in full swing. To get buyers ready, UrbanTurf is running a series of articles (new and old) this week to help educate readers on the process.
From the offer to the down payment to the mortgage, we’ll touch on every facet of the home buying process and more.
The nationwide lending market has been loosening up over the last year or so, and DC is no exception. A new first-time homebuyer program from Fannie Mae lets qualified buyers put as little as 3 percent down on a home purchase. Mortgage insurance on FHA loans have dropped. And on conventional loans, down payment requirements have followed suit.
“Lending is as easy as I can remember it,” John Downs of Caliber Home Loans told UrbanTurf. Downs pointed to lower FHA down payment requirements as being particularly appealing to some buyers.
Even when prices head north of FHA lending limits, which cap out at $625,500, down payments have shrunk.
“A few years ago, say 2011, $100,000 in cash would allow you to purchase a home up to $700,000,” Downs said. “That same $100,000 today can afford you something close to $850,000, a 20 percent increase in purchasing power. You can actually purchase a home for $1.75M and put just 15 percent down.”
Gregg Busch, a lender with First Savings Mortgage, noted that even though down payment requirements had loosened, the standards for who can get a loan haven’t changed much.
“(High-priced mortgages have) loosened up with down payment but not necessarily underwriting guidelines,” Busch said. “Non-agency loans have stricter reserve requirements and credit score requirements.”
But he noted that the down payment requirements had changed dramatically in recent months.
“Lenders are starting to offer 10 percent down loans up to a sales price of $1.2 million, or in some cases higher, (in certain scenarios),” Busch said. “That was unheard of just 12 months ago.”
But though the DC lending market is pretty unfettered, the District’s actual housing market isn’t. That reality is causing frustration for buyers, Downs said.
“Lending is easy, affordability is high, but competition with reduced inventory is causing a lot of realtors and homebuyers a great deal of frustration,” he said. “It is very competitive.”
This article originally published at https://dc.urbanturf.com/articles/blog/more_house_for_less_money_the_lending_market_loosens_up/9653.
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