The Return of the 3% Down Mortgage: Fannie Mae's MyCommunityMortgage

Posted by Laine Smith on 12/24/14 10:00 AM

Topics: Economy Home Buying

Many homebuyers cite saving funds for a down payment as one of their biggest obstacles on their path to homeownership. Fannie Mae has introduced the MyCommunityMortgage® program which features flexible home financing with as little as 3 percent down, opening the gates to homeownership for potential homebuyers with a lack of funds for a down payment.

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Who is MyCommunityMortgage® for?

The goal of this Fannie Mae program is to provide a responsible and affordable financing option for qualified low to moderate income borrowers.

Benefits of MyCommunityMortgage®

MyCommunityMortgage® will appeal to a wide range of borrowers because of the small required down payment, as well as its other features that make homeownership a reality for borrower, including:

  • Allowance of gifted down payment. The 3 percent required down payment can come from personal funds, gift funds, and government grants.
  • Low private mortgage insurance (PMI) rates. With any mortgage program in which borrowers have more than 80 percent loan-to-value (LTV), private mortgage insurance is required.  MyCommunityMortgage® boasts lower PMI rates than that of other low down payment programs, such as an FHA loan.
  • Underwriting flexibility. This means the lender may consider non-traditional forms of credit history, such as rent or utility payments, and may allow higher debt-to-income ratios.

Who is Eligible?

Borrower eligibility for this program is subject to income, credit, and property requirements, as well as the following conditions:

  • Completion of homebuyer education. If the borrower is a first-time homebuyer, they must complete an approved homebuyer education course. If two borrowers are first-time homebuyers, only one borrower needs to complete the course.
  • Borrower income cannot be more than 100% of the HUD area median income.
  • Only owner-occupied 1- unit principal residences, including eligible condos, co-ops, and PUDs allowed (manufactured housing is not permitted).

For additional information about Fannie Mae’s MyCommunity Mortgage, contact one of our mortgage bankers.

 

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