FHFA outlines what it will require to limit risk of 3 percent down payment loans

Backing low down payment program will be done with compensating factors that will limit risk and the size of the program.

November 14, 2014

The announcement from FHFA that it will begin to allow the GSEs to finance loans with as little as 3 percent down payments has been met with mixed reviews.


Some see it as an important step to get more first-time buyers into the market, while others see it as a step down toward the loose lending standards that brought down the market in the mid 2000s. Director Mel Watt said in a speech that “the guidelines will require that borrowers have compensating factors – such as housing counseling, stronger credit histories, or lower debt-to-income ratios – in order to make the mortgage eligible for purchase by Fannie Mae or Freddie Mac.”


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