Freddie Mac announced its Home Possible Advantage program, an affordable conforming, conventional mortgage with a 3% down payment to help more first-homebuyers and other qualified borrowers jump into the market.
“Home Possible Advantage gives qualified borrowers with limited downpayment savings a responsible path to homeownership and lenders a new tool for reaching eligible working families ready to own a home of their own. Home Possible Advantage is Freddie Mac’s newest effort to foster a strong and stable mortgage market,” Dave Lowman, executive vice president of Single-Family Business at Freddie Mac.
The new program offers qualified low-and moderate-income borrowers a conforming conventional mortgage with a maximum loan-to-value of 97% and can be used to buy a single unit property or for a “no cash out” refinance of an existing mortgage.
Freddie is not limiting its product to first-time homebuyers. But if they are first-time homebuyers, they must participate in an acceptable borrower education program, like Freddie Mac's CreditSmart, to qualify for Home Possible Advantage.
Since this product is a lot newer for Freddie, it is waiting to implement the product until March 23 to give itself more time to do some foundation work, officials said on a conference call with reporters Monday morning.
Meanwhile, Fannie Mae is rolling out an option for qualified first-time homebuyers that will also allow for a down payment as low as 3%.