Fannie Mae cuts higher down payments requirements

FNMA or "Fannie Mae" (Federal National Mortgage Association) says it is doing away with higher minimum down payment requirements for borrowers in distressed real estate markets. FNMA is a government-sponsored mortgage financier and starting June 1, 2008 it will require minimum down payments of between 3 percent and 5 percent for all loans that it guarantees of single-family, primary residences.

The move is part of their Keys to RecoveryTM initiative to help resuscitate the mortgage market by equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions. The new down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

They stated that "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover. We recognize that down payment assistance programs remain a viable tool for borrowers who can afford a mortgage long term, but might need a little help getting started".