Fannie Mae, Freddie Mac - Lower Down Payments

Republicans criticize plan as risky lending

Fannie Mae and Freddie Mac have set terms for letting borrowers put down as little as 3 percent of a home’s cost to get mortgages, a step criticized by Republican lawmakers as a return to risky lending.

Starting on Dec. 13, Fannie Mae will allow the lower down payments for first-time homebuyers and permit refinancing borrowers to reduce equity to 3 percent to cover closing costs, the company said today in a statement. Freddie Mac will begin a program in March giving breaks to lower-income buyers and first-time borrowers who get housing counseling.

“These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices,” Melvin L. Watt, who oversees the two U.S.-owned companies as head of the Federal Housing Finance Agency, said in a statement.

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