HomeReady

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

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).

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.

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.

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.

Flexible Eligibility Requirements:

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

REQUIREMENTS

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.

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.

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.

Occupancy Requirement:

The property must be used as the borrower’s primary residence.

Property Eligibility:

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

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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.

Homeready®