What is the HomeReady™ Mortgage?
HomeReady™ is Fannie Mae’s new affordable financing mortgage program designed to help today’s credit worthy borrowers with low to moderate incomes to purchase a home.
Fannie Mae’s goal with HomeReady is to expand access to credit while supporting responsible and sustainable homeownership. Sustainable ownership is achieved through a comprehensive homeownership education to better prepare borrowers for the responsibilities of homeownership.
HomeReady Mortgage Highlights
- Low down payments – as low as 3% down
- DO NOT have to be a first time homebuyer
- Reduced PMI coverage = lower monthly payments
- Risk based price adjustments waived or limited = better interest rates
- Max DTI ratio up to 50% if borrower completes homebuyer education course (DU must issue approve/Eligible….exceding 45% DTI ratio is not guaranteed.
- Flexible source of funds w/ no minimum borrower contribution when buying 1 unit property
- Flexible income sources
- Border rental income allowed
- Non-occupant co-borrower income considered for qualifying
- Non-borrower (not on the loan) household income is permitted as a compensating factor to help borrowers qualify for a larger loan but they must sign an affidavit of plans to occupy the property for a minimum of 12 months. The income is not added to the borrowers but allows borrowers DTI to exceed 45%. The non-borrower’s household income not counted towards income eligibility limit
- Grants, Gifts and Community 2nd’s allowed to satisfy down payment and pay closing costs
HomeReady Borrower Income Limits
Family household members living in the home, but not on the loan, will not have their income count towards the programs’ income limit.
Income from non-occupied co-borrowers will also not count towards the income limit and they can own other properties.
No Income Limit – properties in low income census tracts
100% AMI – all other properties
Don’t think the cities you would consider buying a home would be eligible? You might be surprised at how many census tracts in California have No Income Limit.
HomeReady Income Eligibility Map Lookup
Here is an interactive HomeReady Income Eligibility Map lookup tool.
Or, if you hate doing all this research yourself, contact me and I can help you not only find eligible income areas, but compare HomeReady to other homebuyer assistance programs that may be of benefit to you to determine which one is best.
Why Is Fannie Mae Creating New Loan Programs?
HomeReady was created in response to the changing demographics of today’s diverse home buyer population, Millennials trying to enter the housing market, and a growing elderly population that traditional lenders are not supporting.
Fannie Mae believes programs like HomeReady and MyCommunity are helping first time home buyers with moderate incomes and decent credit gain greater access to responsible home financing.
HomeReady Mortgage: Alternative to FHA Financing?
HomeReady can be a more viable and a good alternative loan program to FHA financing for several reasons
- HomeReady’s PMI is not permanent like FHA’s
- HomeReady doesn’t have an additional (costly) up front mortgage insurance premium fee like FHA does
- Sellers tend to prefer buyers who are using Conventional financing than FHA buyers
- Condo’s – HomeReady doesn’t require an HOA be FHA approved like FHA does
- HomeReady’s PMI monthly premium is usually often less than FHA’s MIP
- HomeReady’s source of income is more flexible than FHA
- FHA doesn’t have income limits
Get The Facts & Compare Your Options!
There are more loan programs than you or even most loan officers are aware of. Don’t let a mortgage lender steer you away from a loan that may be MOST BENEFICIAL to you because they don’t offer it or don’t understand the program. Contact me here or call 951-215-6119.