3 Percent Down
It’s been a while since the US made a wholesale push to get more cash and income-strapped households into the ever more unaffordable American dream of owning a house, three years to be exact, which is when nationalized housing agency Freddie Mac last rolled out a conventional mortgage that only required a 3 percent down payment for certain borrowers.
Here was a problem. The modest requirement the mortgage program had back in 2015, excluded most Americans. The program, which as we described at the time was designed for qualified (that being the key word) low-and moderate-income borrowers – i.e., Millennials was growing. It just wasn’t growing fast enough!
While putting 3 percent down was not challenging for most Americans, the modest income required, was.
So according to Zero Hedge, last week, Freddie Mac announced on Thursday it was about to supercharge its 3 percent down program and launch a widespread expansion of the offering, when it announced that it is rolling out a new conventional 3 percent down payment option for qualified first-time homebuyers, – effectively the same as the 2015 program… with one small difference: there would be no geographic restrictions; more importantly there no longer will be any income restrictions.
Assuming I understand the program correctly, first-time buyers need ONLY the 3% down to buy a house. That means no income!
In order to qualify for the mortgage, at least one borrower must participate in homeownership education.
The New York Times said in February 2015, “But it is important to know that the low-down-payment options now available are not synonymous with the subprime loans that proliferated during the housing bubble, which often required little more than a pulse to qualify. Without these new programs, advocates said swaths of the population will be locked out from the forced savings plan that is homeownership. After all, it would take 20 years for a household earning about $50,000 to save 10 percent, plus closing costs, for a $158,000 home.”
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