More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Many had been requiring down payments of at least 20% since the recession began.
Some lenders also are waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family.
The deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment. They are often targeted at buyers who live in expensive housing markets, where even a small down payment can equal tens of thousands of dollars.
Does nobody remember 2008? This kind of loose lending is exactly what led to the massive wave of foreclosures. All of this has happened before; all of this will happen again.
But while this is bad news for the long-term health of our economy, it is good for savvy home buyers with good financial habits. If you’re in the position to buy a house, having to put own 3% means you can keep a lot of your powder dry for investment opportunities that may come along later (e. g. buying foreclosed homes or short sales after this housing bubble pops).
Understand current reality: interest rates are very low right now, so it is a good time to take out a loan, assuming you can afford the payments with your current income, you have paid off your other debt, and you have developed the self-discipline and good financial habits necessary to repay the loan.