Fannie Mae HomeReady
There is a new program available from several lenders called HomeReady 1% for first time home buyers.
This unique program is offered by Fannie Mae through it’s preferred lenders and allows for first time home buyers to purchase a home with very little money out of pocket.
As a result, HomeReady requires a 3% downpayment from the home buyer, but several lenders are making a 2% contribution for the down payment, allowing the home buyer to only come to the table with 1%.
The best part is that the 2% that the lender is contributing for the down payment is not a second loan and has no strings attached.
What To Look Out For
In addition, a few key points that you need to be aware of:
- Minimum credit score required will be in the 700’s
- Program is only for first time home buyers
- Most lenders cap the max purchase price to $250K
- The property must eligible (most are)
- There might be income cap, this depends on the property location.
Property & Income Eligibility
First of all, use the link in the button to check if the property is eligible for the HomeReady program.
Pay special attention to the income limit, some areas have it, some do not. Just make sure your income is eligible.
What’s displayed on the map?
Income Limit: The income limit a borrower must not exceed to be potentially eligible for HomeReady within that census tract. Note: In low-income census tracts, the Income Limit will read “No Income Limit.”
AMI: HomeReady area median income.
Eligibility: Either 100% of AMI or no income limit for low-income census tracts.
City/County, State: City or county and state where the property is located.
- one-unit properties, including manufactured housing, and units in condos and PUDs;
- units in co-ops, provided the unit conforms to Fannie Mae’s requirements, and the lender has received specific authority to deliver mortgages on co-ops to Fannie Mae;
- existing structures and new construction;
- and two-, three-, and four-unit properties.
Additional restrictions apply to transactions with LTV, CLTV, or HCLTV ratios of 95.01 — 97%.
In conclusion, if you are a first time home buyer with not much money for a downpayment, this might just be the mortgage program for you.