Did you know, a recent Freddie Mac blog post reported that 40% of today’s condominium and single family homebuyers are financing 90% of the cost to purchase a home? Interestingly, studies reveal that 40%-50% of the public believe you need 15%-20% for a down payment to be able to purchase a condo or single-family home. Another interesting fact, since 2010, the number of individuals putting down less than 10% grew three fold.
So why are so many individuals confused about the money needed to put down on a new house. Well. its because od the housing collapse of 2005-2007, some agencies are calling for new guidelines for purchasing a home. These agencies are arguing that there should be a minimum of 20% and some are even calling for 30% down payments on all residential mortgages. The good news, these new standards haven’t been implemented.
To clear up this issue, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales and Relationships Management, in a recent article explained that a person:
“Can get a conforming loan, conventional mortgage with a down payment of as little as 5%”
Purchasing a Boston home 3% down payment
So will we ever be able to purchase a Boston condominium with only 3 percent down? This month, Federal Housing Finance Agency Director Mel Watt stated that requiring a residential mortgage with only 3% down may soon be available:
To Increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises to develop sensible and responsible guidelines for mortgages with a loan-to-value ratios between 95 and 07 percent….
So what are your thoughts? Do you think lowering the down payment requirements bring back another housing bubble and collapse? Or will it help young Boston condo buyers enter the market which would help the Massachusetts economy.
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Updated: January 2018