The Federal Housing Authority (FHA) and the Government Sponsored Enterprises (GSEs) have implemented policies to make credit more widely available for first-time buyers. In January 2015, the Federal Housing Authority reduced the annual mortgage insurance premium by 0.5 percentage points ( from 1.35 percent to 0.85 percent). In 2015, Fannie Mae and Freddie Mac also accepted mortgages with three percent downpayment.
However, the impact of these measures in attracting first-time homebuyers appears to be modest for a variety of reasons. Lack of information about low downpayment products may be one reason. In fact, NAR’s 2016 Q3 Housing Opportunities and Market Experience (HOME) Survey found that only 13 percent of those aged 34 or under believe they need a downpayment of five percent or less. Additionally, although low downpayment loans are available, some buyers may want to save for a bigger downpayment to meet underwriting standards (e.g., debt-to-income ratios, loan-to-value ratios), save on mortgage insurance, or get a lower interest rate.