New Guidelines to Benefit Low-Income and First-time Buyers

New lending guidelines from Fannie Mae and Freddie Mac will enable more low-income and first-time buyers to purchase a home, with a down payment as low as three percent instead of the current minimum of five percent. According to the agreement, the new loans would be fixed-rate mortgages of up to 30 years for primary residences, although specific companies’ policies will vary. Fannie explained that it could begin underwriting the loans before the end of 2014 and that they would be for first-time buyers who would be required to pay mortgage insurance and complete a financial counseling program. Freddie plans to start offering the mortgages as early as March 2015, as an alternative for low- and moderate-income borrowers. They must earn less than an area’s median income, pay insurance and receive counseling.

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