Lenders Easing Up on Down Payment Requirements?

Tight credit conditions are showing more signs of easing, just in time for the spring buying market to heat up, CNBC reports. Home buyers may be able to qualify with lower down payments—a big shift from the last four years when 20 percent down payments on a loan were practically required. But mortgage giants such as Fannie Mae are reportedly approving more loans with lower down payments, even buying loans with as little as 3 percent down, CNBC reports. However, these loans do require private mortgage insurance. Fannie Mae is seeing its share of the market rise as FHA—which used to be one of the only agencies to offer low down payment loans—is seeing its market share shrink as it raises its premiums. Loans with between 3 and 10 percent down payments accounted for 18 percent of Fannie Mae’s business for home purchase loans in the third quarter of 2012, the latest data available. "In general lenders have been willing to do more than they may have been willing to do in the past," says John Forlines, chief credit officer for Fannie Mae's single family business. "Our requirements have not changed significantly, but other parties taking risk, the lenders and mortgage insurance companies in particular, have been more flexible than they may have been in the past."