Dive Brief:

• It’s official: Mortgage lenders will be accepting down payments of as low as 3% on fixed-rate home loans, now that Fannie Mae and Freddie Mac have unveiled the details of their new low down payment programs.

• Depending on which of the government-backed mortgage finance companies is involved, the loans may be only for first-time buyers; low-income buyers; and buyers who have not owned another home within the last few years. In addition, borrowers may be required to buy mortgage insurance and participate in credit counseling sessions, which have been proven to improve repayment rates.

• Fannie Mae’s program will begin on Dec. 13, although lenders in the market might take a few months to adapt to the new guidelines. Freddie Mac will start backing the loans  on  March 23. Both organizations already back some loans with down payments of as low as 5%.

Dive Insight:

Lowering the down payment from the typical 20% to 3% is expected to help thousands of cash-strapped but credit-worthy would-be homeowners qualify for mortgages. Surveys show that saving for a down payment is the greatest obstacle to buying a first home.

The move has met with praise from some lenders who have complained that high down payments and strict credit requirements have kept millennials and other first-time or low-income buyers out of the market. But others have criticized the concession, saying lower down payments give buyers less “skin in the game” and can lead to more defaults.