Changes to down payment requirements for its first-time homebuyer program have been made by the Federal Home Loan Mortgage Corp.
The changes impact Freddie Mac’s Home Possible Advantage Mortgages. The program is an affordable option for first-time homebuyers and other qualified borrowers.
McLean, Virginia-based Freddie is making the changes in order to ensure continued access to sustainable solutions for borrowers with limited down payment savings.
According to an industry letter from the secondary lender, impacted transactions include those where the borrower is receiving a gift or grant from the seller.
Freddie said such gifts or grants will only be permitted after a contribution of at least 3 percent of the home value is made by the borrower.
Acceptable borrower contributions include personal funds,
a gift from a related person and funds from government agencies. Also allowed are funds from employer housing programs and affordable seconds.
“This 3 percent contribution requirement is an important factor in creating a responsible, sustainable homeownership opportunity,” the letter stated. “Gifts or grants from the seller must not be funded directly or indirectly through the Mortgage transaction, including differential pricing in rate, discount points or fees.”
