A lot of maneuvering has taken place recently with Fannie Mae in order to stay abreast and competitive in the ever changing mortgage market environment. One of the by-products of this was the launch of the new “HomeReady” product in December of last year. Unlike its predecessor (MyCommunityMortgage) you do not have to be a first-time homebuyer to access this program. Some of the key features of the HomeReady program are as follows:
▸ There’s no first-time homebuyer requirement
▸ Lower interest rate for the borrower
▸ Flexible credit score requirements (down to 620 on 1 unit properties)
▸ Only a 3% down payment is required (which can come in the form of a “gift”)
▸ Reduced mortgage insurance coverage (which equates to a lower MI payment than that of a standard conventional loan)
▸ Income limits do apply (borrower(s) must be at or below 80% of the Area Median Income as determined by Fannie Mae)
▸ Purchase and limited cash-out refinance transactions are eligible
▸ 1-4 unit properties and condominiums are eligible
▸ Pre-purchase homeownership education course required
As usual it is best to consult with a qualified home loan expert as there are many other factors that can potentially affect one’s ability to qualify for this loan program. This is why it is critical to work with a lender that knows the process and guidelines.
Next week we will touch on a similar loan program (aka Fannie Mae’s 97% “standard” option) that is less restrictive and thus may be an option for those who cannot qualify for the HomeReady program.
Thanks for reading!