Fannie Mae scraps higher downpayment rule

Company will not force borrowers to put up more money in weak markets

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updated 10:35 a.m. ET May 16, 2008

WASHINGTON - Fannie Mae says it is doing away with higher minimum downpayment requirements for borrowers in distressed real estate markets.

The government-sponsored mortgage financier said Friday it will require minimum downpayments of between 3 percent and 5 percent for all loans that it guarantees.

That replaces a December policy that required a higher minimum if the loan was for a home in a market with declining real estate prices.

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Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market.