Hurry! 3% Down-Payment Deadline Coming Soon!!

Homeowners who wish to put 3% down on their home take note: Fannie Mae has announced that beginning on November 16th, they will increase the minimum down-payment requirement on conventional loans from 3 to 5%. Homebuyers who wish to purchase a house with 3% down still have time to obtain a Fannie Mae-backed loan but need to act fast; they need to be pre-approved by November 15th, and the loan must close by March 31st of next year.

On November 16, Fannie Mae will implement scheduled changes to its automated underwriting system (DU or "Desktop Underwriter"). DU is used by lenders to approve loans, and several of the changes will make it harder for some borrowers to qualify. These include tougher debt ratio calculations, removal of interest-only options; and stricter requirements for down payments, increasing the minimum amount from 3% to 5% of the loan balance.

While increased down payments could deter some buyers, there are still significant Fannie Mae advantages over FHA: they have no upfront mortgage insurance costs, and 5% down Fannie loans also have lower PMI costs than either FHA or current 3% down loans.

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