I’m actually pretty shocked that down payment requirements have loosened and not tightened.  What do you think this means for the housing industry and the lending landscape?  Do you think it’s prudent?

The highlights of this 3% down payment, conventional loan option are:

  • Conforming loans only (Loan Amount of $417,000.00 and below)
  • Single Family Residence only (no condos or townhomes)
  • Minimum FICO score of 720 required
  • 3% down payment must come from your own funds (cannot be a gift from family)
  • Maximum qualifying (Debt-to-Income) ratio: 41.0%
  • No income limitations

Now, despite this being available, the cost is extremely high.  It is much higher than the rate and monthly Mortgage Insurance amount on an FHA loan, so financing a low down payment purchase with FHA will still make more sense.