It is a noticeable shift from the last four years, when 20 percent down on a home purchase loan was the only game in the neighborhood.
Lenders have been willing to do more than they may have been willing in the past. The requirements have not changed significantly, but other parties taking risk, such as the lenders and mortgage insurance companies, have been more flexible than they may have been in the past.
Lenders are increasingly approving low down payment loans, and government sponsored mortgage giant Fannie Mae is buying more of them.
As the housing market improves, private mortgage insurers are starting to remove overlays on higher loan-to-value loans, meaning the percentage of the home value that is mortgaged. Low LTV’s and high credit scores were the rule recently for the private insurers, but that may now be loosening, making these loans cheaper than FHA.
With rates now rising to the highest level in six months, according to a report from the Mortgage Bankers Association Wednesday, the banks are seeing fewer refinances.
Lenders, as traditionally happens, as they have more capacity, they might be willing to stretch their credit limits more.
They are also just responding to more business, particularly from first time home buyers who have been largely on the sidelines until now.