Buy a Home With 3% Down Using the Fannie Mae HomeReady Program
If you’re house hunting and working with a tight budget, I have fantastic news for you. Earlier this year, Fannie Mae introduced HomeReady, a new affordable loan program geared toward homebuyers who qualify for a mortgage but may not have a large sum of funds to use for a down payment.
Similar to previous loan products, HomeReady is a low down payment conventional loan product that allows buyers to purchase a home for as little as 3% down. While there are similarities, HomeReady is unique in that it allows a non-borrowing member’s income to be considered on the loan.
Here’s everything you need to know about the Fannie Mae HomeReady loan program:
Benefits of a HomeReady mortgage
- Low down payment financing. Yes, you really can buy a home for 3% down! This means homebuyers, both first-time and repeat, can receive up to 97% financing.
- Flexible funding. HomeReady allows co-borrowers to contribute to the loan without living in the property. Let’s say your child recently graduated from college and is looking to purchase a home, but needs help qualifying for a mortgage. As the parents, you can contribute to the loan without moving into the financed home.
- Competitive interest rates and lower private mortgage insurance costs: HomeReady’s interest rate is competitive and the private mortgage insurance tends to be lower than similar loan products on the market.
- Temporary PMI. Since the HomeReady program is a conventional loan product, borrowers have the ability to remove PMI from their monthly payment, once they reach 20% equity in their home.
- Feasible credit score requirements. This loan product also allows homebuyers with a credit score of 620 or higher to secure a mortgage.
- Built for multi-generational families. There are a lot of blended and multi-generational households these days. HomeReady is allowing non-borrowers to use their household income to qualify for the loan. For instance, children, grandparents or extended family members can use their income to help the homebuyers qualify for a loan.
What do I need to do to qualify?
- Qualifying requirements: As with any mortgage loan, the HomeReady mortgage contains its own set of qualifying requirements. If you’re interested in learning if you qualify, send us a message. We’d be happy to put you in touch with a team member who can answer your questions and help you get started on the right path.
- Homeownership education. To prepare for the responsibilities tied to owning a home, all homebuyers financing a mortgage with the HomeReady lending product will also need to complete an online homeownership education course. The course is $75 and takes an estimated four to six hours to complete.
Putting all of these things into consideration, certainly a 3% down payment is feasible for most households, especially when you consider where your down payment might be hiding.
Want to learn more about the HomeReady lending product? Leave a question in the comments below, or contact us, and we’ll put you in touch with our talented loan officers.