I heard from my loan officer Thursday that between the lenders marking zip codes as “declining market,” and Fannie Mae/Freddie Mac doing the same thing, and appraisers noting it more and more as well, nearly all markets in the Twin Cities have been marked as a declining market or are likely to be hit by it soon.
In nearly all circumstances, this means that a 0% down buyer will need 5% down and a 5% down buyer will need 10% down. For anyone with 10% down or more there is no change. FHA loans in many circumstances are not subject to this rule but with the Nehemiah downpayment assistance program ending 3/31/08, buyers will need at least 3% down.
I discussed this issue earlier this year and I don’t think that this will be the last time it comes up… the mortgage market continues to change and will become more and more challenging in the short term until the housing market and financial markets stabilize.
Update: The FHA Downpayment Assistance Programs (DAPs) have been allowed to continue after the original March 31st end date. This means that we’ve still got FHA that will work as a 0% down program regardless of if the property/area is marked as a “distressed market.”
