We’ve been hearing a lot of talk lately about Fannie Mae’s HomeReady™ Program but what is it and how can it work for you?
This program is designed for today’s homebuyers. It is designed for creditworthy, low to moderate income borrowers. This program was created back in December 2015 and is backed by Fannie Mae, the Federal National Mortgage Association, a government-sponsored enterprise since 1968.
This is allowing people in lower income neighborhoods and in minority-heavy areas to get easier access to low down payment mortgages using today’s current interest rates.
The HomeReady™ Program a 3% down payment and it also allows the entire household to pull their income together as a basis for income eligibility. This means that working adult children, grandparents, relatives or pretty much anyone that lives in the home can use their income in order to get approved for this loan.
This program can also be used for refinancing allowing up to a 95% loan to value ratio in many cases. The HomeReady™ program is also not just for first-time homebuyers. Many programs designed by the US government are specifically directed at first-time homebuyers but this program is available for repeat buyers as well and there are no restricted time frames on when you previously have owned the property.
The HomeReady™ program really has just two eligibility requirements: you must not be the owner of another residential property in the US (even though there are contingencies for those that own interest in other properties) and you must agree to complete a homeownership counseling course.
Income eligibility requirements are as follows, there is no income limit in properties in low-income census tracts and 100% of area median income is applied to all other properties. Basically, it comes down to where you are buying and the income eligibility requirements for that neighborhood, town or region.
This is a great alternative to FHA financing. Other Pros include:
- Purchases up to 97% including FTHB
- Refinances up to 95% LTV, regardless of current mortgage program
- Reduced Mortgage Insurance
- High Balance available
- Relaxed AMI income limits based on census tracts
- Gift funds eligible for entire down payment
While there are many pros to this new program there are some cons as well that you need to be aware of. This may have a higher interest rate than other low down mortgage rate programs and it does require the borrower to pay ongoing private mortgage insurance on a monthly basis until a certain loan-to-value ratio is achieved. There are also certain limits on the mortgage amount, however, there’s no upfront ongoing mortgage insurance through FHA and the private mortgage insurance is typically less expensive. There are also more flexible mortgage qualification requirements as it relates to the borrower’s credit history and score.
Be sure to call me at any time to find out your eligibility and more information on this program.