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Calling All Home Buyers! The 3% Down Payment Makes a Comeback

3 percent
New programs available for first-time and lower-income homebuyers.

This post originally appeared on LearnVest.

Socking away enough for a down payment isn’t easy. In fact, recent research found that, with Americans’ current savings rate, it would take the average buyer as long as 12 years to build up a 20% down payment on a median-priced home.

As a result, many first-time, younger and lower-income homebuyers have been largely left out of the housing market in the years since the recession.

Now, Fannie Mae and Freddie Mac are hoping to change that. The mortgage giants announced in December 2014 that they would begin backing mortgages with down payments as low as 3%.

The catch? Borrowers would have to meet strict standards to be eligible, such as a credit score of at least 620. The program would also only be available for first-time homebuyers, those who haven’t owned a home in a few years, and people with lower incomes. Further, borrowers would be required to undergo home-buyer counseling and purchase private mortgage insurance before signing on the dotted line. And those eligible for the program would likely have to meet other measures to offset the increased risk, like boasting a low debt-to-income ratio.

“This will be particularly helpful to those who are strapped by wealth rather than credit challenges,” Jim Parrott, a senior fellow at the Urban Institute, told The Wall Street Journal.

At the same time, some experts worry that the loosening of down-payment standards could spell trouble, saying the program is simply a revival of the lax lending practices that helped lead to the recession.

“We should have learned from past experience that this is incredibly dangerous,” Anthony Sanders, a finance professor at George Mason University, told The Wall Street Journal. “Down payment matters, big time, and we’ve always known this.”

LearnVest generally recommends that — no matter how much the bank says you can afford — buyers save up a 20% down payment before making a purchase, with mortgage payments of no more than 28% of monthly take-home pay.

Want More? Check out these articles from LearnVest:

Checklist: I’m Ready for a Home! 9 Steps to Stress-Free Home-Buying

7 Top Home-Buying Mistakes People Often Make

Try Before You Buy: I Took a Mortgage Test Run