Down payment requirements, carrying other monthly debt and building mortgage-ready credit are common hurdles for today’s homebuyers. A new mortgage product addresses these issues and makes home financing accessible to creditworthy low- to moderate-income homebuyers through Fannie Mae’s new HomeReady™ program.
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Allowance of extended-household member incomes
According to the National Association of REALTORS, 13 percent of home purchases in 2014 were made by multi-generational households.
HomeReady™ recognizes the growth of multi-generational households and extended-household living arrangements by allowing the use of non-borrower incomes to be used as compensating factors for qualifying.
Low down payment requirement
Saving for a down payment is one of the most commonly cited obstacles for today’s homebuyers. HomeReady™ allows up to 97 percent financing, as well as flexible sources of funds for the down payment and closing costs. There is no minimum contribution required from the borrower’s own funds on 1-unit properties.
Flexible credit guidelines
HomeReady™ also recognizes that some otherwise-qualified borrowers have not built a substantial credit history. Non-traditional credit sources, i.e. cell phone bills, rent, utilities, etc., can be used to establish credit for HomeReady™ borrowers.
HomeReady™ is also big on promoting sustainable and informed homeownership, which is why borrowers are required to take an online homeownership education course to help them prepare for the responsibilities that homeownership brings.
To further promote homeownership sustainability, HomeReady™ borrowers will also have access to post-purchase homeownership counseling services.
Allowance of non-occupant borrowers
The non-occupant borrower income flexibility offered through HomeReady™ allows a parent or any other willing and financially able person to be a borrower on the loan.
Reduced and cancellable monthly mortgage insurance
Homebuyers who purchase with less than a 20 percent down payment are typically required to carry and pay for private mortgage insurance. HomeReady™ borrowers with loan-to-value ratios exceeding 90 percent benefit from a lower mortgage insurance coverage level than Fannie Mae’s standard mortgage insurance coverage.
Borrowers also benefit from the ability to cancel their monthly MI payments when their loan balance drops below 80 percent loan-to-value.
Contact one of our mortgage bankers for more HomeReady™ benefits and eligibility requirements.