What is the Fannie Mae 3/2 down payment mortgage program and how can I qualify for it?


The Fannie 3/2 down payment mortgage program is a fixed-rate loan with a payback period of 15 - 30 years that requires only a 5% down payment.

3% of the down payment must be from the borrower's own funds, while the other 2% can be paid by a relative, government (state/federal/local) agency, nonprofit organization or employer. The main advantage of this program is that less cash is needed upfront to buy a home.

Qualifying for the 3/2 Down Payment Mortgage Program

  • Borrowers must not earn more than 100 percent of the area median income for their Metropolitan Statistical Area (MSA) or county.
  • Exceptions to the area median income limit are available in specified high-cost areas; these are:
    • 120% in Bergen/Passaic, New Jersey MSA
    • 120% in Portland, Oregon MSA
    • 120% in Seattle, Washington MSA
    • 125% in Newark, New Jersey MSA
    • 135% in Boston, Massachusetts MSA
    • 140% in the State of California
    • 165% in New York, New York MSA
    • 165% in Suffolk, Nassau, Westchester and Rockland counties (New York)
    • 170% in the State of Hawaii
  • Borrowers must have cash reserves equal to one month's mortgage payment after closing.
  • Borrowers may be obligated to attend a home buyer education session offered or approved by the lender.

Features of a 3/2 Down Payment Mortgage Program

  • Only 3% required from borrower's funds means less cash needed up front to buy a home.
  • The expanded debt-to-income ratios enable you to qualify using up to 33 percent of your gross monthly income for housing expenses (instead of the standard 28 percent) and 38 percent for your total monthly debt expenses (instead of the standard 36 percent).
  • 15, 20 or 30-year repayment periods.
  • Fixed-rate mortgages only.
  • Can be used to buy one-family, principal residences; including condos, and planned unit developments.
  • Can be used with the Lease Purchase, Community Seconds and Community Land options by Fannie Mae.
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