More buyers putting down less on a home
A 20-percent down payment is no longer the norm. In the past year, 1.5 million borrowers purchased their homes with down payments of less than 10 percent, according to a study by Black Knight Financial Services. That marks a seven-year high.
The growth of low down payment loans has mostly been triggered by new programs offered by mortgage financing giants Fannie Mae and Freddie Mac, which brought back 3 percent down payment loans in 2014. They require borrowers to pay mortgage insurance, just like the FHA does.
So far, defaults on recent low down payment loans have been modest, Black Knight reports. But economists note that’s mostly because home prices are rising fast and borrowers have been gaining equity quickly.