Intro to HomeReady
The basics of a Fannie Mae’s HomeReady Mortgage
HomeReady Mortgage is a Fannie Mae product that offers a lower down payment minimum. It is designed as a more accessible option for homebuyers who may not have enough cash saved for a conventional mortgage, or have a lower-than-average income. This article will explore qualifications, benefits, and requirements of a HomeReady Mortgage
Do I qualify for a HomeReady Mortgage?
HomeReady Mortgages are designed for creditworthy low-income borrowers. The following are the qualification requirements for a HomeReady Mortgage.
- Income: Fannie Mae HomeReady Mortgages are for lower-income borrowers; specifically those whose household income is 80% or less of the property’s Area Median Income (AMI). Check the Area Median Income (AMI) of the home’s location to see if your household income qualifies.
- Credit score: The minimum FICO credit score needed for a HomeReady Mortgage is 620.
- Residence type: The property you are buying must be your new primary residence. It can include condos, co-ops, PUDs, and manufactured homes, depending on the circumstances.
What are the benefits of a HomeReady Mortgage?
- Smaller and more flexible down payments: HomeReady Mortgages require a minimum down payment of only 3%. In addition, you as the borrower are not required to contribute to this down payment yourself. Unlike other conventional loans, HomeReady loans allow borrowers to source up to 100% of their closing costs from gifts, grants, or Community Seconds.
- Competitive pricing: HomeReady Mortgages allow for lower premiums on monthly mortgage insurance (MI) than other Fannie Mae products or FHA loans. A HomeReady borrower who has a credit score of ≥680 and has a loan to value (LTV) of ≤80% will pay even less in mortgage insurance premiums than a standard HomeReady borrower.
What do we need?
- Full mortgage application, including, but not limited to, income and asset documentation.
- The certificate of completion of a homeownership education course, if all borrowers listed on the loan are first-time homebuyers. Homeowner education courses can be taken through any Fannie Mae Qualified Provider for a fee or through Fannie Mae’s free HomeView program.
Why do I need to take a homeownership course?
The purpose of HomeReady products is to responsibly extend credit to lower-income borrowers. Part of that responsibility is assuring you have the full knowledge of everything that goes into homeownership and the homebuying process.
When do I need to complete the homeownership course?
If the course is a requirement to close your loan, you will need to complete it and provide a certificate of completion before you can get final approval.
While the only requirement is to have the course completed prior to closing your loan, it’s never too early to start learning about the process and preparing yourself for the first steps. You can get registered for FannieMae’s HomeView education course free of charge; once you have completed the course, please print or save a screenshot of your certificate of completion.
What should I expect from the homeownership course?
All approved homeownership courses will take you through the ins-and-outs of the homebuying process, including guidance on: knowing when a good time is for you to buy, best practices for savings, and applying for your home purchase.