Fannie Mae's HomeReady program is a mortgage product that is designed to help low-to-moderate income borrowers purchase a home. This program offers a number of benefits and features that can make it easier for borrowers to qualify for a mortgage and become first time homeowners. Now first time home buyers can have all loan level price adjustments removed provided at least 1 of the borrower's is a first time home buyer. Loan level price adjustments are adjustments to the price of your loan based on lower credit scores and higher loan to values which would equate to a higher interest rate. The combined income of the borrowers on the loan application has to be 100% or below the median income. Attached below is the link to look up this income information. All you need to do is type in the property address of the home you are interested in buying and look at the 100% median income.
Click here to look up your income information
One of the biggest benefits of the HomeReady program is that it allows for a down payment as low as 3%. This is significantly lower than the traditional 20% down payment required for most mortgages, making it easier for borrowers to save up for a down payment and purchase a home. Additionally, the program allows for lower monthly mortgage insurance premiums for potential home owners that are putting less than a 20% down payment. The program does have an education requirement that at least 1 borrower on the loan has to complete. The class generally takes and 1 to 2 hours to complete. The class has to be a HUD approved counseling class. The borrower will have to print out a completion certificate at the end.
Another benefit of the HomeReady program is that it has more flexible credit requirements than traditional loans. While traditional mortgages often require a high credit score and a long credit history, the HomeReady program may be more lenient in these areas, making it easier for borrowers with less-than-perfect credit to qualify for a mortgage. The borrowers will have to have a minimum of a 620 credit score to qualify. Generally no 30 day lates in the last 12 months and any non medical collections will have to paid.
The program can be used to purchase the following property types a single-family home, a two- to four-unit property, or a PUD. This can make it a great option for borrowers who are looking to purchase a multi-unit property, such as a duplex or triplex, and live in one unit while renting out the others to help cover the mortgage payments.
Overall, the Fannie Mae HomeReady program is a great option for low-to-moderate income borrowers who may have difficulty qualifying for a traditional mortgage. The program's low down payment requirement, flexible income and credit requirements, and ability to purchase multi-unit properties, make it a viable choice for those who are looking to become homeowners.
- Purchases up to 97% loan to value
- Reduced Mortgage Insurance
- Lender Paid Mortgage Insurance option available
- Refinances serviced by Fannie Mae eligible up to 97% Loan to Value
- Credit scores between 620 and less than 680 get better pricing and lower rates
FAQs
What is Fannie Mae HomeReady and how does it differ from other mortgage programs?
Fannie Mae HomeReady is a mortgage program that makes it easier for low-to-moderate income borrowers to purchase a home. It offers more flexible underwriting guidelines compared to conventional loans, including lower down payment and credit score requirements, as well as the ability to include non-traditional income sources in the loan application.
What are the income limits for the HomeReady program?
The income limits for the HomeReady program vary by location and are based on the median income for the area. First time home buyers have to be 100% below the median income to qualify. The median income is reduced to 80% of the median income if no first time home buyers are buying the home.
Are there any specific credit score requirements for HomeReady?
The minimum credit score requirement for the HomeReady program is 620. The loan is put into an automated underwriting system called Desktop Underwriter which issues an approval or denial based on the credit history, income, and assets used to buy the home. An approve/eligible is needed to qualify for the program.
Can I use HomeReady to purchase a multi-unit property?
Yes, HomeReady can be used to purchase a multi-unit property, as long as the borrower will occupy one of the units as their primary residence.
Are there any additional assistance programs available through HomeReady?
Yes, HomeReady offers a variety of additional assistance programs, including down payment and closing cost assistance, as well as options for borrowers with limited English proficiency. Borrowers can also combine HomeReady with state or local assistance programs to further increase affordability.
