I can't speak to specific program offerings without more detail, however I know most conventional 3% down options suck compared to FHA simply because the monthly PMI payments are incredibly expensive

While the permanency of FHA PMI quite frankly sucks....the lower rates and lower monthly PMI payments usually make it a better choice for first time buyers than a 3% down conventional option

Generally a catch somewhere that will lead to rich bankers, homeless mortgagees and taxpayers paying the bills somewhere down the road.

I’m a mortgage broker with 50+ lenders to select from and to me these bank ads look pretty conservative. Borrowers can still get FHA loans with low interest rates/pricing even with a 560 credit score. If need be, I have lenders that finance FHA down to a 500 credit score. Plus, the conventional 3% down mortgage options are not new. This loan program has been around for a while and as long as the borrower has good credit scores these low down payment options price out really well, even on the high balance option. The mortgage insurance can be the deal killer if the credit scores are less than excellent because the MI is credit score driven and poor credit leads to a significantly higher MI rate and that is what pushes the payment so much higher. However, for those buyers with great credit the 3% down option is priced amazingly well even if you do split MI or lender paid MI. It’s definitely a great option for the well qualified buyer that has great credit but very little savings for the down payment.

MANY ins and outs in the rules- mostly outs and denied

12 months reserves, MI payments...  Jonathan writing about this knows there are no single family homes in OC (or San Francisco where these ads run) for under $417000. Condos are difficult to get approved under this program (projects need 51% owners and no lawsuits - all in OC in built in last 9 years have these scammy builder lawsuits. Then condo + MI + $400 HOA makes the buyer of a $415000 condo need to be earning $150000. which is too high of income for this program... 

Why are Wells and Chase running ads in market areas (Bay Area and OC) where the program doesn't fit?? Just to make phone ring?? 

I can see many homebuyers eyes getting wide as they now think they can afford something bigger and better...since the cash outlay is peanuts.

UP to $417,000 with only 3% down needed?  If they don't have more money saved, I guarantee they won't be able to keep up the payments.

(If they can't save up money with no mortgage, no taxes and no home maintanence, how are they going to afford the morgage when their car needs new tires?)

Eve

There is nothing new about competitive 3% down programs.

I leave this topic to the mortgage professionals I work with to explain.  It's nice to have a general knowledge of programs but the specifics are best left to those who know best.  

Wells Fargo  is offering home buyer education class also which will educate all not just the 1st time home buyer.  Its not mandatory but will give them education as well as lower interest rate also. There are already some of program with 3% down payment but this program has taken out some of those restrictions which was stopping qualified buyers to buy home.

There are many mortgage products.  It would be necessary to see which products a specific client can qualify for and then compare those products to determine which is a best fit.

Bring them all on. I'll sell houses with them.

I hope it does not lead to another high foreclosure rate.

I think it is fine, but these buyers will still need to get through underwriting and that has been the biggest issue for most marginal buyers.

With the shortage of good properties in our area and home prices going up quickly it will probably lead to bust.

I've seen 3% down conventionals being offers for months. Reducing FICO might be risky. Next we'll be seeing Stated Income / No Doc loans.

I would have to know more about the program, but the PMI or MI would be important.

I don't - I let our preferred lender do that thinking!

John has a good answer.

My first home loan was from WF - they come up with some interesting programs

John Meussner and Caroline Gerardo are two of  the experts on this. As an agent I caution my clients to read the fine print on these offerings. 

I like that they come up with some aggressive ways to fund.

Fred Griffin what's the catch? I do not think loan products are that easy....

I would like to hear more about the specific details.

I like to see consumers given lots of options.  

the 620 credit score makes me nervous

We have a lender in town doing 100% conventional with 680 scores. We are a 100% VA market so this is getting lots of attention.

I don't know too much about these, haven't really been following them (I just send my clients to a mortgage lender and they find the best program for them).  As long as the requirements are strong and not "just make up a number for you income and debts" I think it has the potential to benefit the market.  Especially since most of the big banks have stopped doing FHA loans (technically most have made the requirements insanely hard so while they still offer them, no one can qualify for them, while some have flat out said "No Mas!").

 Fred,

 I think you need to have more skin in the game, I hear some lenders are doing the old no income no docs again will we ever learn?

The 3% down is nothing new. I've had it for over a year now, and the down payment can be all gifted. The monthly payment is lower than FHA (not by much) and you don't have the 11 year wait on PMI insurance that you have with FHA. IMO, I do think that this is a recipe for disaster, if not done by a lender that explains everything and makes the borrower understand it.

WE will see a repeat of history...

I feel uncomfortable with these with low credit score. Candidates for default not a good sign.

It's a starting point but $417,000?  Anyone buying that size home should be able to afford more for a down payment.  Would make me wonder if they will be on the foreclosure list down the road.  It might not end well.

I think it would be great if the debt to income ratio was lowered, and the percentage of income for a housing allowance lowered so people aren't getting themselves into mortgage prison.  it would help people buy homes they can actually afford.

its good for hitting the ground running

I think it will help those folks who don't have savings for a down payment.  I doubt it will lead to a boom or a bust.