Buying a House with Little Money Down

Posted by Steph Kaye on Friday, October 24th, 2014 at 4:20pm.

Good Credit Pays Off

 

The director of the Federal Housing Finance Agency (FHFA) Melvin Watt, announced Monday (Oct. 20) the plans to increase the amount of mortgage to borrowers that have maintained and are in still good standing with their credit, but don't have enough money for a down payment. In a speech at the Mortgage Bankers Association annual convention in Las Vegas, Watt said the FHFA would issue guidelines allowing consumers to be able to still get a mortgage who can only afford 3% to 5% down payments.

He spoke about the low-down-payment loans, saying "details are forthcoming", but the idea is part of a bigger message to lenders that rigid credit restrictions have inhibited creditworthy borrowers from becoming homeowners. For low and middle income Americans able to have access to affordable mortgages, lenders need to feel secure extending credit.  Not feel that they will have major losses like they did after the housing bust in 2008. In his speech, Watt reassured lenders that as the FHFA refines and correctly interprets the relationship between lenders and Fannie Mae and Freddie Mac.

Usually  consumers should plan to save 20% of their future home's value for the down payment, but that of thousands, even tens of thousands of dollars, which many consumers do not have, especially after the other costs of buying a home such as closing costs. Home prices have increased, student loan debt is outlandish, but wages have remained unchanged, further making it difficult to own a home.

With some of the changes Watt mentioned, consumers with good credit could access government-backed home loans putting little money down and better interest rates than are available under the current loan programs. Interest rates and down payments have a large impact on how much you pay for a home or if it is even feasible for you to purchase a home. 

Something to take away from Watt's speech: He repeatedly refers to "creditworthy borrowers," so while lowering credit requirements is part of the plan, buyers will still need to have good credit history when applying for home loans. If you're not sure where you stand or think you need to improve your credit before shopping for a home, check your credit scores regularly.

If you are in the market for a new house and would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you. 


Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Lang Premier Properties. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.


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