In San Diego, buying a home can seem out of reach for some due to the cost of living we pay for living in America’s Finest City, with our perfect year-round weather and awesome sites to see and activities to enjoy. Coming from a small town in Canada, with harsh winter months and extreme fluctuations in seasons, having the privilege to live here in San Diego is priceless and it is coupled with extreme pride in also being a homeowner here as well.
In recent surveys however, a large amount of people believe that you need 20% more downpayment in order to buy a home, which can be a huge deterrent for those that have the dream of buying a home in here. Effective today, December 11, 2014, that dream of owning a home here in San Diego will now become a reality for a lot more people than ever before.
Fannie Mae’s 3% Down Payment Conventional Mortgage
In order to open the playing field for more buyers that do not have a huge down payment saved up, Fannie Mae just rolled out it’s new 3% Down Payment Mortgage Program. Freddie Mac is also expected to follow suit, in early 2015. Here are some highlights of the program:
Fannie Mae’s 3% Down Mortgage Program
- Maximum Mortgage Amount of $417,000
- 640 minimum Fico
- There is monthly PMI, however it is a LOT lower than FHA’s 1.3% requirement
- Huge difference between FHA 3.5% down and this program is there is NO UPFRONT Mortgage Insurance premium with this program. With FHA, buyer’s have to pay a 1.5% upfront mortgage insurance fee through the close of escrow (usually rolled into their loan), as well as a monthly 1.3% mortgage insurance premium.
- With FHA, you have to pay Private Mortgage Insurance (PMI) for the lifetime of the loan, regardless of how much your principal balance is on your loan. With the 3% down program, the monthly mortgage insurance payment automatically goes away once your principal balance is less than 78% of the original principal balance.