Understanding Freddie Mac and Fannie Mae

If you're just starting to think about investing in a home, you've likely heard a few things about government-sponsored enterprises Freddie Mac and Fannie Mae. However, you might not understand what they do and what they can offer you as an interested homeowner.

About Freddie Mac and Fannie Mae

According to the Federal Housing Finance Agency, both Freddie and Fannie were created by Congress. Their purpose was to improve access to homeownership for qualified borrowers. 

They purchase home loan products through lenders and sell them to individuals looking for a mortgage alternative that better matches their finances.

These enterprises provide interested buyers who qualify with down payment options as low as 3 percent of the purchase price of the home.

Assistance Through the Crisis

After the housing market crisis in 2008, many homeowners lost their houses and the industry suffered greatly. However, Freddie and Fannie offered programs and loan products intended to help those who were hit the hardest, according to the U.S. Department of Housing and Urban Development.

Today's housing market has improved a great deal in recent years. Many individuals have decided to enter the housing market and look for the perfect home, which has bolstered the industry.

Freddie and Fannie for Young Buyers

Crippling student loan debt has kept many otherwise qualified buyers from being able to save up for a down payment. Consequently, these individuals aren't able to apply for a conventional mortgage. However, Freddie and Fannie's low down payment alternatives open up an opportunity for individuals to access a home loan with as little as 3 percent down toward the home.

With the assistance of Freddie Mac and Fannie Mae, qualified borrowers can obtain home mortgages and enjoy the house of their dreams.