A new report from CNN Money outlines how lower FHA monthly insurance premiums and the lowering of minimum down payment requirements by Fannie Mae and Freddie Mac are making it easier to become a homeowner.
Borrowers who have steady income and good credit, but not much money in the bank, will find that it recently became easier to buy a home. Down payment requirements, which rose after the subprime mortgage crisis, are easing again as lenders and mortgage backers try to draw in new buyers.
The Federal Housing Administration has long backed loans for borrowers with lower credit scores and with down payments as low as 3.5%, but until this year it also required hefty insurance payments.
FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums.
At the end of 2014, Fannie Mae and Freddie Mac announced plans to slash minimum down payments from 5% to 3%.
