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3% downpayment loans are back! 620 credit scores or above

A new program from Wells Fargo & Co. promises to make it easier for prospective borrowers to apply and qualify for a low downpayment residential loan.

Borrowers who use the yourFirst Mortgage program can purchase a home with a downpayment as low as 3 percent, an announcement Thursday indicated.

The San Francisco-based company said the program is intended to help first-time homebuyers and low- to moderate-income consumers become homeowners.

Fannie Mae is acting as a partner in the program.

According to Wells Fargo, the program features fixed interest rates. Prospective borrowers with less than 10 percent down can earn an interest rate reduction of 12.5 basis points by completing a homebuyer education course.

Expanded credit criteria include nontraditional sources like tuition, rent and utility bill payments.

The loan is fully documented and underwritten, and income from others who will reside in the subject property – such as family members or renters – can be considered for debt-to-income ratio calculations.

Downpayments and closing costs can come from gifts and downpayment assistance programs.

“yourFirst Mortgage is a conventional loan that avoids the complexities associated with loan applications for previous affordable lending programs,” the news release stated.

“There are a lot of conventional loan products with low downpayment options, but the criteria are so complex that it creates barriers for many qualified borrowers,” Wells Fargo Home Lending Executive Vice President Brad Blackwell said in the statement. “With yourFirst Mortgage, we wanted to provide access to credit and simplify the experience while maintaining responsible lending practices.”

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