More 3% Down Payment Mortgages in Washington

April 29, 2018
Last updated:
September 8, 2021
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Summary: We’ve written about low down payment mortgages in the past, noting that some mortgage programs offer down payments as low as 3% of the purchase price. There have been some new developments on this front. We’ll go over what these are in this article.

The HomeOne mortgage product rolled out by Freddie Mac makes 3% down payment mortgage loans available to more Washington home buyers.

More and more home buyers are taking advantage of 3% down payment mortgage loans in Washington State and nationwide. This is the result of a program by Freddie Mac.

Broader Access to 3% Down Payment Mortgages

A few years ago, Freddie Mac introduced a conventional mortgage product that allowed home buyers and homeowners to make a down payment as low as 3%. But the program was limited to certain borrowers who met specific requirements. They are now expanding the program.

Freddie Mac is one of the two government-sponsored corporations that buy and sell mortgages through the secondary market. Fannie Mae is the other one. These organizations have specific requirements for the types of loans they can buy. And those standards can “trickle down” to borrowers in the primary market.

In short: The mortgage guidelines used by Freddie Mac and Fannie Mae affect most borrowers who are seeking a home loan. That’s what makes all of this relevant to consumers.

According to Freddie Mac:

“Available to qualified first-time homebuyers for a low down payment of just 3%, the Freddie Mac HomeOne℠ mortgage is a low down payment option that serves the needs of many first-time homebuyers, along with no cash-out refinance borrowers.”

The original “Home Possible” mortgage program mentioned above was introduced a few years ago. It was primarily designed for low- and moderate-income borrowers in certain areas. That program still exists.

The “HomeOne” rollout is basically an expansion of the original program, which extends 3% down payment mortgage loans to even more Washington home buyers and homeowners.

What makes this new version unique is the fact that there are geographic or income restrictions. This could make Freddie Mac more competitive with the FHA’s mortgage insurance program, which offers down payments as low as 3.5% for eligible borrowers.

For many years, the FHA program was one of the only options for “regular” borrowers seeking a down payment in the 3% range. But in recent years, we’ve seen increased options for 3% conventional mortgage loans. The rollout of the HomeOne program is the latest step in that evolution.

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Additional Details and Requirements

Here are some additional details we’ve gleaned from a product fact sheet:

  • Education: Participating borrowers must undergo some from of homeownership education from an approved source. According to Freddie Mac documents: “When all borrowers are first-time home buyers, at least one borrower must participate in homeownership education. This requirement may be fulfilled with our free, online CreditSmart® program or another acceptable homeownership education program.”
  • Expansion: Unlike similar programs the company has offered in the past, there are “no geographic or income restrictions” associated with this 3% down payment mortgage option. So it is available to a larger pool of borrowers.
  • LTV: This program allows for a loan-to-value (LTV) ratio of 97%. This means that the down payment can be as low as 3% for qualified borrowers.

This is good news for home buyers in Washington State who lack the funds for a larger down payment. Creditworthy borrowers will soon have another option for buying a home in Washington with relatively little money down.

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Ready to Apply For a Mortgage in WA State?

Do you have questions about mortgages? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a mortgage company serving borrowers in Washington, Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest. Contact us today with any queries you may have about home loans.

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