Fannie Mae and the National Association of Home Builders have announced a joint initiative to help people buy newly constructed homes.

The initiative, announced at the association's annual convention in Dallas, would introduce some mortgage product options and tailor some established loans to newly constructed homes. It is scheduled to begin this year.

Thomas Ducey, a Fannie Mae senior vice president, said Charles J. Ruma, president of the builders association, approached Fannie Mae with the ideas for the loan package.

"The timing was just right for us to get together," Mr. Ducey said. "We can help the home builders be more successful in selling their homes, and we want to help more people qualify for those loans."

One new mortgage product, Flexible 97, would require only a 3% down payment and have more flexible underwriting guidelines, which Fannie Mae has not disclosed.

Mr. Ducey said the Flexible 97 option is on the agency's automated underwriting software and that any consumer who qualifies for a mortgage may chose this type of financing.

"This will allow the use of temporary interest rate buydowns, where we used to only offer permanent buydowns," he said. "The builder would pay the difference from the market interest rate and what the borrower is paying."

Mr. Ducey said the builder's advantage would be lower consumer cost after paying the interest rate difference, which may give the buyer incentive to buy.

Also on the agency's underwriting software are 80/10/10 mortgages, in which Fannie Mae buys financing arrangements involving an 80% first mortgage, a 10% second mortgage, and a 10% down payment.

With the new partnership, builders would be encouraged to provide the second mortgage option of the package, allowing lower interest rates on these types of loans.

An additional two components of the joint initiative are still being tested but could be available later in the year, Mr. Ducey said.

The first is a construction-to-permanent loan program, being tested by CTX Mortgage, North American Mortgage Co., Plymouth Savings, and Continental Savings, among other lenders.

Mr. Ducey said the agency would buy 30-year loans made to homebuyers that would combine construction and permanent financing of single-family homes.

There would be only one closing; when construction is completed, the loan would automatically convert to a long-term mortgage.

This program would let buyers reduce closing costs and lock in mortgage rates early in the process. It would also let builders free up their lines of credit.

The last initiative in the package is a master appraisal pilot, under which builders would need only one appraisal for a model home in a subdivision or project site.

Estimates would be made and updated on a quarterly basis for upgrades and added options, said Mr. Ducey.

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