What is a HomeReady™ Loan?
The Federal National Mortgage Association, known as Fannie Mae
offers a 3% down payment mortgage program for qualified home buyers.
HomeReady™
replaces the Fannie Mae’s MyCommunityMortgage (MCM) program.
The HomeReady™ program only requires a 3% down payment and there are NO first time homebuyer requirements! Prospective home buyers are permitted to obtain the required 3% down payment and other closing costs as a cash gift or grant from an eligible donor (i.e. parent(s), relative, spouse, girlfriend or boyfriend, or a fiancé/fiancée). The money does not need to be yours.
Buyers do not need to bring any of their own money to closing.
The HomeReady™ program, allows buyers to use income from anyone
living in the house to assist in qualifying (i.e. grandmother's
social security).
The loan program does have an income limit that is based on the county area income where the home is located. Family size is not used to determine income eligibility. However, the program can also be used by borrowers of any income level in low-income census tracts nationwide; and designated disaster areas, such as areas affected by flooding, storms, or wildfire.
HomeReady™ mortgage rates are often below the rates for a typical
conventional mortgage.
HomeReady allows for non-traditional credit.
Credit scores as low
as 620 are permitted.
Public servants (firefighters, police, health care workers,
teachers, etc.) and military personnel may access special
flexibilities, such as use of overtime and part-time income to
qualify.
Debt-to-income ratio:
Income from a non-borrower household member may be considered for
a debt-to-income (DTI) ratio up to 50 percent. HomeReady allows
non-occupant borrowers, such as a parent. Debt to income is a simple
calculation that evaluates the amount of income and monthly bills.
Because HomeReady™ specifically targets low-to-moderate income
households; the loan program waives many of the loan fees that
accompany “standard” conventional home loans.
The HomeReady™ loan program usually has discount interest
rates.
Private mortgage insurance (PMI)
is required for down payments less than 20%, however the monthly
cost is reduced.
The program is available as an adjustable-rate mortgage (ARM)
or fixed-rate mortgage; with terms choices of 30 years, 20 years, 15
years, or 10 years.
Multi-unit homes are permitted, provided the borrower intends to
live in one of the home’s units (i.e.primary residence) property,
HomeReady™ cannot be used for an investment home.
Refinance: Limited cash-out refinance up to 95
percent LTV is an eligible use of this product.
Loan application is made
through approved Fannie Mae lenders. Most banks and mortgage brokers
offer the HomeReady™ loan program.
Seller paid closing costs: The home seller is
permitted (not required) to pay up to 3% of the sales price toward
closing costs with a 3% down payment.
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Frequently
Asked Questions the About HomeReady™ Mortgage Program
Q. Can you refinance into a HomeReady loan?
A. Yes, you can refinance your current mortgage into a
HomeReady loan.
Q. Do you have to be a first time home buyer for
HomeReady?
A. There are no first time home buyer requirements.
Q. Does Fannie Mae HomeReady have income limits?
A. The total annual qualifying income may not exceed 80% of
the area median income for the property's location.
Q. Is HomeReady a conventional loan?
A. The HomeReady loan is considered a conventional loan
since it parallels conventional loan guidelines and meets Fannie Mae
loan requirements.
Q. What is the minimum credit score for HomeReady?
A. The minimum credit score is 620