What does the SubPrime Crash mean for first time home buyers?

What does the SubPrime Crash mean for first time home buyers?

The answer to this is more a function of your credit history and financial means. If you have a good, stable job and good credit, the sub-prime crash really won't mean much to you. If your credit record is dodgy, or buying a house (or in NYC, co-op/condo), you might not get the loan. Additionally, many co-op boards are very picky when it comes to financing the purchase and I wouldn't be surprised if many of them have also upped their financial requirements as well. I have heard rumours that the banks aren't writing "jumbo" loans now (>$500,000), but I've found that to be false. Maybe some banks in some part of the country are, but those in Florida and around the NYC area don't seem to have a problem with it. Again, I think the rumour comes from those with less-than-optimal credit. There's a reason it's called sub-prime. Sub = below, prime = optimal. In the past, many of these people wouldn't have been given loans, so yes, we shouldn't be surprised when sub-prime loans fail or default, especially when we're writing loans to people who can barely afford the 4% payments. Let the interest rise up to 8% on their adjustable-rate-mortgage and they're screwed. Blame the banks & mortgage brokers for handing out ARMs to those who can't afford rate increases. ARMs are fine if you have substantial financial means and are using this money for investments or financial management, but for those blue-collar workers who can barely afford $1200/mo for a mortgage payment, it's a total mistake.