2019 Idaho Real Estate Blog

Declining Markets / How Much Can You Borrow? Main Boise Home Loans
Who really makes the decisions on mortgage programs and availability of credit for most mortgages? Will 100% purchase financing go away? Read on to learn more!


Dear Visitor:

Interestingly enough, there was a time (you may or may not know or remember this) where a 50% down payment on a home home purchase was the norm. My how times have changed! In the years from 2004-2006, I personally saw 100% purchase mortgages that were structured on 80/20 combo deals that required no Private Mortgage Insurance...for people who had credit scores of at least 560!?!? Now, many lenders are moving to a minimum credit score of a 680...these lenders fear additional mortgage delinquencies and defaults that could add to an already record number of foreclosures, and want to strengthen their mortgage portfolio.

Across the nation, there are many markets that Fannie Mae and Freddie Mac have tagged as "declining markets." What does this mean? Generally, if you want to purchase a home in a declining market, then even the best credit will only qualify for 5% less financing then the maximum allowable under Fannie and Freddie guidelines.

EXAMPLE: If you have an 800 credit score, significant liquid assets, steady employment, and acceptable debt-income ratios, you still would only qualify for 95% financing in a declining market. 5% down is not the end of the fact, far from it. However, there is a perception among home buyers that because of how hot the nation's housing market had been in the years leading up to 2007 (when things started changing) that 100% financing will always be around...don't bet on it.

I don't have a mortgage industry crystal ball, and I'm not here to make predictions. However, saving 5% to 10% for a down payment may be the absolute best thing you can do to help yourself in this housing market. Lender underwriting guidelines have gotten tighter, and loan applications and appraisals are being scrutinized more than ever before. thing will never change in this country: CASH IS KING! Anytime you bring cash to the table in a mortgage, your application will absolutely be looked at more favorably.

For more information on the national housing market and value trends, please visit the Office of Federal Housing Enterprise Oversight's website at This agency is who helps Fannie Mae and Freddie Mac determine if a market is declining, and therefore subject to the 5% LESS approvals on mortgage loans I talked about. In this website, check out the House Price Calculator at You can also search your city and find appreciation/depreciation trends.

If you would like more information on this topic, or have another mortgage or industry related question for me, feel free to call me at (208) 880-0316, or email me at  You can also visit my website at

Eric Leigh, Mortgage Loan Officer
1419 N. Midland Boulevard
Nampa, ID 83651
(208) 880-0316
Posted by Eric Leigh at 3/6/2008 3:58:00 PM
Comments (2)
Re:Declining Markets / How Much Can You Borrow?

Of the local banks in the treasure valley, who do you see between 2005 til now having the most lax underwriting standards...high LTV, no money down, no-doc, stated etc...

Not looking to go lender direct, but looking for small public banks to do some 10K reading on for potential BK puts and shorts. Cheers

I appreciate your insight
Posted by on 3/8/2008 3:36 AM
Re:Declining Markets / How Much Can You Borrow? comment on banks and their tight/loose guidelines and underwriting.

Posted by Eric Leigh on 3/9/2008 5:10 PM
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