DISCOUNTED MORTGAGE INSURANCE(MIP)

A borrower who is doing less than 20% down is required to pay monthly mortgage insurance. HomeReady & Home Possible offer discounted MIP to save homebuyers more money. This is especially important for buyers with credit scores below 700.

LOWER INTEREST RATES

HomeReady & Home Possible allow us to provide homebuyers with lower rates compared to regular conventional loans. This especially applies to homebuyers with credit scores below 700.

INCOME LIMITS

One big drawback of these two programs is the income limits. Unlike regular conventional loans, these programs are intended for low to moderate-income households to help borrowers compete in the market. The income limits will vary depending on the County where the purchase is being made. In the Denver Metro Area, the income limits in 2023 have been increased to $100,400. In some cases, to help a homebuyer qualify, we can exclude overtime or bonus income as long they can still qualify for the loan.

You can plug in a property address into the HomeReady / Home Possible lookup tool to check for a specific area. Both programs have the same income limits.

Fannie Mae HomeReady Income Lookup Tool

Freddie Mac Income Eligibility Tool

DOWN PAYMENT

Maximum 97% financing (3% down payment). This is another reason why these programs are a great alternative to FHA since FHA typically a requires 3.5% down payment. However, if a homebuyer exceeds $726,200, a 5% down is required. See below for more info about loan amounts. On a 1 Unit property, the entire down payment can be a gift! If someone is purchasing a 2-4 Unit property gift funds are still allowed but 3% has to come from the buyer.

The following unit types must fall within a certain LTV range:

• 1 Unit: 97% LTV (3% Min Down Payment)
• 2 Units: 85% LTV (15% Min Down Payment
• 3-4 Units: 75% LTV (25% Min Down Payment)

HOMEBUYER EDUCATION

Homebuyers must take a first-time buyer course. These can be done online and are not very time-consuming.

• HomeView: Fannie Mae’s Homebuyer Education Course
• CreditSmart: Freddie Mac’s Homebuyer Education Course
• ReadyNest: MGIC’s Online Homebuyer Education Course

TEMPORARY BUYDOWNS

The following third parties are eligible to cover a temporary buydown:

• Seller
• Builder
• Real Estate Agent

OTHER HIGHLIGHTS

• Must be a primary residence
• Not required to be a first-time homebuyer. This is another incentive of these programs. A borrower could have recently sold another property or even own a current rental property. Rental income can be used from the vacating property.
• Manufactured homes limited to 95% financing (5% down payment)
• Must be a fixed mortgage IE 15-year fixed or 30-year fixed. ARM loans are not allowed.
• Non-occupying co-borrowers are allowed but the minimum down payment is 5%.
• DACA Borrowers are eligible