What is the FNMA HomeReady® Loan?
Designed to help creditworthy low-to-moderate income households overcome the obstacles to affordable homeownership, this program offers borrowers an opportunity to build wealth and strengthen communities by providing affordable fixed rate loans with more flexible underwriting requirements.
The FNMA HomeReady® loan offers some of the most important elements that borrowers facing economic challenges need like no income limits in low-income census tracts, lower MI coverage, and a fixed-rate fully amortizing product, which offers rate and payment (principal and interest) stability for borrowers.
FNMA HomeReady® Loan Basics
– Serves creditworthy low- to moderate-income borrowers
– Borrower not required to be first-time buyer
– Must meet AMI qualifying limits for property location
– Purchase and Refinance Options
– 3% borrower contribution on 2-4 units
– Cancellable Mortgage Insurance
– Lower MI coverage
– 10, 15, 20, and 30 year Fully Amortizing fixed rate
– 620 minimum qualifying credit score
What are the benefits?
Low Down Payment: This loan is attractive to potential homebuyers with low to moderate income levels because it offers a down payment requirement as low as 3% for a one unit home with a fixed rate mortgage. The down payment needed is higher for adjustable rate financing and multi-unit properties.
Flexible Sources of Funds: Proof of sourced or seasoned funds aren’t required for the FNMA HomeReady® loan down payment and closing costs. Borrowers can use gifts, grant funds, and cash on hand as source of necessary funds.
Homeownership Course: Loans closed on or after December 7, 2019 require the online Framework® course for this program – for at least one borrower – only if all occupying borrowers are first-time homebuyers (regardless of LTV). The course is beneficial to borrowers by helping them learn about sustainable homeownership, as well as helping them understand the loan process so they are better prepared and know what to expect as they move from home search to loan application to closing.
Who is eligible for HomeReady® Financing?
The HomeReady® mortgage is an ideal solution for low-to-moderate income borrowers looking to gain economic security through owning a home. One of the main eligibility requirements require income not exceeding 80% AMI for the property’s location (includes properties in low-income census tracts).
Borrowers who occupy the Property may not have an ownership interest in any other residential dwelling at the time of closing. This restriction does not apply to a non-occupant co-borrower. A manufactured home, regardless of the type of land ownership, is considered a residential dwelling for this purpose. Ownership in a timeshare, either as a deeded interest or a right-to-use arrangement, is not considered ownership in a residential dwelling for this purpose.
At least one borrower must complete a Fannie Mae approved online pre-purchase homeownership education program through Framework, and receive a referral to housing counseling prior to the close of the loan.
Buying a Home with a FNMA HomeReady® Loan
The FNMA HomeReady® loan tackles the common financial challenges that many low-to-moderate borrowers face and offers increased flexibility like considering the income from a non-borrower household member, including children, grandparents, and other extended family members. Non-relatives may also help buyers financially qualify for this mortgage. In addition, the program allows for co-borrowers who don’t live in the property to help a buyer qualify for a mortgage.
The FNMA HomeReady® loan not only helps put low-to-moderate income families on a pathway to homeownership and economic security, this program can also be used to refinance an existing mortgage with a Limited Cash Out Refinance.
Through this program, existing Fannie Mae loan holders in need of more favorable loan terms can use their equity to pay off the mortgage-related debt and receive a limited amount of money back at closing. HomeReady® allows financing of up to 97% of the home’s value.
The FNMA HomeReady® Mortgage Loan Process
Here’s how our home loan process works:
– Complete our simple FNMA HomeReady® Mortgage Qualifier
– Receive options based on your unique criteria and scenario
– Compare mortgage interest rates and terms
– Choose the mortgage loan offer that best fits your needs
– If purchasing a home, you can now start shopping with confidence with an Elite Realtor to find your perfect home