To target potential homebuyers who can’t muster a 20 percent down payment, lenders are moving away from FHA loans and instead offering their own low down payment loan products.
Redfin reports that Fannie Mae, Freddie Mac, Wells Fargo, and JPMorgan Chase will all buy loans with 97 percent financing, allowing customers to put just three percent down if they have decent FICO scores.
Citibank and Bank of America also have three percent options, and Quicken even has a 1% Down Program.
As usual, there are no free rides. Lenders that don’t require mortgage insurance almost certainly charge higher mortgage interest rates. So it always pays to shop around. Making a down payment of less than 20 percent on a home is a complicated financial decision, but if it’s something you’re considering, you have options.