Just when you thought that FHA (which requires only 3% down) was the only way to get away with less than 10% down, it appears that Fannie Mae is changing its policy. Fannie had recently slapped a ‘declining market’ label on the entire Washington, DC, area, which had the effect of increasing the minimum down payment of 5% to 10% for most buyers. But according to the Wall Street Journal, as of June 1 that policy will end.
This is huge news for easing credit conditions for new buyers, many of whom have trouble getting together 10% plus the closing costs. FHA, which requires only 3% down, had seen a huge uptick in activity in recent months as a result. Where Fannie goes, Freddie is likely to follow, so look for improved credit conditions and more loan options in the near future.