In today’s real estate market, where interest rates are low and home prices are stable and rising, many renters are considering homeownership for the first time. For someone with passable credit and good income, the challenge may be coming up with enough down payment funds to close the deal. That’s where programs like the Fannie Mae 3% down loan for first time buyers come into play.
Here are some highlights of the program:
- Loan amounts up to $417,000
- Minimum down payment: 3% of sales price
- Minimum FICO score: 620
- Gift funds allowed for down payment and/or closing costs
To further lower your cash requirement, the down payment for this loan can also be covered through down payment assistance programs such as the Home Plus HFA Preferred program or Pathway 2 Purchase program. However, keep in mind that underwriting requirements and minimum FICO score guidelines can be more strict with down payment assistance. In some cases, even with the minimum required credit score, you may have trouble getting approved for these loans due to other factors.
Some things that can compensate for marginal credit and help you get approved for a loan are:
- high income;
- low amounts of debt;
- conservative use of consumer debt;
- money in the bank after closing;
- your own down payment funds instead of gift or down payment assistance funds;
- long-term employment;
- little or no increase in housing expense
If you are interested in buying your first home, contact us today for a free consultation. We will figure out all the options available to you, and walk you through the whole process of buying your first home. And if you need some help improving your credit score first, our Credit Services team will come up with a step-by-step plan, and help you know exactly what to do and how long it will take.