Home Ready

The HomeReady loan program, offered by Fannie Mae, is designed to make homeownership more accessible for low to moderate-income borrowers. Here are the key features, benefits, and requirements:

Features:

  1. Low Down Payment:

    • Allows for a down payment as low as 3% of the home’s purchase price. This can come from personal savings, gift funds, grants, or secondary financing (such as a loan or a grant from a nonprofit organization, state or local government, or employer).
  2. Flexible Income Sources:

    • Considers income from non-borrower household members (such as family members living with you) to help you qualify for the loan. This is particularly beneficial for multi-generational households.
  3. Reduced Mortgage Insurance Costs:

    • Typically offers lower private mortgage insurance (PMI) costs compared to other conventional loans, potentially making it more affordable on a monthly basis.
  4. Homeownership Education Requirement:

    • Borrowers are required to complete an online homeownership education course. This course aims to provide valuable information and guidance throughout the home-buying process, helping borrowers make informed decisions.
  5. No First-Time Homebuyer Requirement:

    • Available to both first-time and repeat homebuyers, although it is often used by first-time buyers due to its low down payment option.
  6. Flexible Eligibility Requirements:

    • Allows for flexible eligibility criteria compared to traditional mortgage loans, making it easier for borrowers with varying financial situations to qualify.

Benefits:

  • Low Down Payment: Makes homeownership more accessible by reducing the initial cash outlay required to purchase a home.

  • Lower Mortgage Insurance Costs: Helps reduce monthly housing costs by offering potentially lower PMI premiums compared to other conventional loans.

  • Flexible Income Considerations: Recognizes income from non-borrower household members, which can help borrowers qualify for higher loan amounts.

  • Educational Support: Requires completion of a homeownership education course, which can empower borrowers with knowledge and confidence throughout the home-buying process.

Requirements:

  1. Income Limits:

    • Borrowers must meet income limits, which vary depending on the location of the property and the number of people living in the household. These limits are based on the area’s median income and are designed to target low to moderate-income borrowers.
  2. Credit Score:

    • Generally requires a credit score of at least 620. However, specific lenders may have their own credit score requirements.
  3. Debt-to-Income Ratio:

    • Typically allows a maximum debt-to-income (DTI) ratio of up to 50%, though this can vary based on the lender and other factors.
  4. Homeownership Education:

    • Completion of an online homeownership education course is mandatory for all borrowers. This course covers topics such as budgeting, mortgage financing, and home maintenance.
  5. Occupancy Requirement:

    • The property must be used as the borrower’s primary residence.
  6. Property Eligibility:

    • The property being purchased must meet Fannie Mae’s eligibility requirements, which generally include standard appraisal and condition guidelines.

Have a Question?

Flint Hills Mortgage Has An Answer

HomeReady loans are available to both first-time and repeat homebuyers. Borrowers must meet income limits, have a minimum credit score (typically around 620 or higher), and complete a homeownership education course.

Income limits vary depending on the location of the property and the number of people living in the household. Generally, borrowers must have income that is at or below the area median income (AMI) for their geographic area.

The minimum down payment is 3% of the home’s purchase price. This can come from personal savings, gift funds, grants, or secondary financing.

    • Borrowers are required to complete an online homeownership education course. This course covers topics such as budgeting, mortgage financing, and home maintenance. It aims to ensure that borrowers are well-informed and prepared for the responsibilities of homeownership.

HomeReady allows income from non-borrower household members (such as family members living with you) to be considered when qualifying for the loan. This can help borrowers qualify for a higher loan amount based on combined household income.

The main benefits include lower down payment requirements (3% versus the traditional 5% to 20% for conventional loans), potentially lower mortgage insurance costs, and more flexible eligibility criteria regarding income sources and credit history.

HomeReady loans can be used to finance various types of properties, including single-family homes, townhouses, and condos. The property must meet Fannie Mae’s eligibility criteria, which typically includes standard appraisal and condition requirements.

No, HomeReady loans are specifically designed for primary residences only. Borrowers must intend to occupy the property as their principal residence.

Contact mortgage lenders or brokers who offer conventional loan products and inquire about their specific requirements and programs for 0% down payment options. They can provide personalized guidance based on your financial situation.

Borrowers are required to pay private mortgage insurance (PMI) on HomeReady loans, which helps protect the lender in case of borrower default. PMI costs may be lower compared to other conventional loans, depending on factors such as borrower credit score and down payment amount.

HomeReady loans are offered through participating lenders who are approved by Fannie Mae. Borrowers can start by contacting a mortgage lender that offers HomeReady loans to discuss eligibility requirements, gather documentation, and begin the application process.

Disclaimer

Loans are subject to credit approval. Terms and conditions apply. VA loans are available to eligible veterans, active-duty service members, and certain spouses. USDA loans are available for properties located in eligible rural areas and are subject to income limits. FHA loans require mortgage insurance premiums and have specific eligibility requirements. Conventional loans typically require a down payment and private mortgage insurance (PMI) if the down payment is less than 20% of the home's purchase price. 0 down conventional loans are subject to lender approval and may have stricter credit and income requirements. Borrowers should consult with a mortgage specialist to determine eligibility and explore all available loan options.

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801 E Douglas Ave RM 206 Wichita KS 67202

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