It’s been a while since the US made a wholesale push to get more cash and income-strapped households into the ever more unaffordable American dream of owning a house, three years to be exact, which is when nationalized housing agency Freddie Mac last rolled out a conventional mortgage that only required a 3% down payment for certain borrowers.
The problem is that even with the modest requirement the mortgage program had back in 2015, most Americans who needed access would be excluded. The program, which as we described at the time was designed for qualified (that being the key word) low-and moderate-income borrowers – i.e., Millennials – saw limited progress over the last few years, with FHFA Director Mel Watt telling Congress last year that Freddie’s 3% down program (along with a similar one from Fannie Mae) was continuing to grow.
It just wasn’t growing fast enough, because while putting 3% down may not have been especially challenging for most Americans, having even the modest income required to go along with it, was.
So fast forward to last week, when Freddie Mac (FMCC) announced on Thursday  it was about to supercharge its 3% down program and launch a widespread expansion of the offering, when it announced that it is rolling out a new conventional 3% down payment option for qualified first-time homebuyers, – effectively the same as the 2015 program… with one small difference: there would be no geographic restrictions; more importantly there no longer will be any income restrictions. To wit:
In other words, whereas many Americans could not qualify for the original 3% down program because, well, they lacked virtually any income, that will no longer be a hindrance and the government will effectively backstop the lack of income as a new wave of ‘income-challenged’ Americans rushes in to buy houses.
Amusingly, the new program, which is called HomeOne (full brochure below), puts Freddie Mac in direct competition for mortgage business with the Federal Housing Administration, which also only requires 3% down on some mortgages.
