Fannie Mae “HomeReady” Mortgage
This mortgage loan program is a relatively new low down-payment option for first-time home buyers, offered through Fannie Mae. If you have non-traditional credit or just fall into the historical underwriting guidelines, HomeReady makes it easier for you to get a home. If you have a low down payment, need to use income from a household member who’s not on the loan, or if you want to use income from an Airbnb rental that you've got setup in the home you're buying, HomeReady could be the right loan option for you.
Minimum down payment: 3% down for a 1-unit property. 15% for a 2-unit property, and 25% for a 3-4 unit property.
Primary Residence? Yes, HomeReady is only for those who intend to make this purchase their primary residence. You cannot use it to buy a second home or a rental property.
How does HomeReady compare vs. FHA? Great question. If you put less than 20% down in the form of a down-payment, you will have mortgage insurance (aka “MI”). However, the mortgage insurance fees are slightly lower than MI on other, similar Fannie Mae loans, and significantly lower than mortgage insurance on FHA loans.
Minimum credit score? HomeReady minimum credit score is 620, whereas FHA you can have as low as 580 for a 3.5% down payment, or 500 for a 10% down payment. So there are trade-offs to going with HomeReady vs. FHA, depending on your current credit profile.
Freddie Mac “HomePossible” Mortgage
Freddie Mac’s Home Possible & Home Possible Advantage mortgage programs are focused on first-time homebuyers, have low 3-5% down-payment requirements, but are designed for low-to-moderate income buyers. As a result, to be eligible for either mortgage program, your income cannot exceed the Area Median Income (AMI) where the property is located.
You can apply for both programs whether you're looking to purchase or refinance your home, but in no cash-out refinances are allowed. The rationale here is that Refinances through this program should only be used to lower the interest rate or the term of the mortgage.
Minimum FICO score: Minimum credit score for these programs will vary, but expect to have at least a credit score of 620.
Freddie Mac “HomeOne” Mortgage
The HomeOne mortgage is available only as a fixed-rate mortgage that meets conforming loan limits (under $453,100 loan amount). The mortgage must be secured by a 1-unit primary residence as well.
Minimum down-payment: Minimum down payment requirement of 3 percent.
Only first-time home buyers will be eligible for the HomeOne loan program. If you're wondering whether you meet the definition of a first-time homebuyer, currently a first-time homebuyer is defined as someone who hasn't owned a home in the past three years.
For more information on Freddie's HomeOne loan program, give us a call and we'll walk you through it.
State Specific Mortgage Programs
In addition to these national loan programs designed to help first-time homebuyers, check your local state housing agency to see if there are any mortgage discounts or special programs that can help you even further.
Stem Lending operates (currently) in Pennsylvania, Virginia and Colorado; here are a few examples of state level programs that can help you save time and money on your mortgage:
Pennsylvania Mortgage Discounts
As a mortgage broker based in Philadelphia — we are keenly focused on helping home buyers in Pennsylvania secure their mortgage with lowest costs we can help find.
The Pennsylvania Housing Finance Agency (PHFA) is a non-profit organization which serves the people of Pennsylvania by offering affordable housing resources, including loans and rent assistance. The PHFA also provides mortgage loan programs, and we can help you navigate the ins & outs of these programs.
A lesser known fact however, is that veterans or buyers in certain target counties of Pennsylvania don’t have to meet first-time home buyer restrictions to benefit from PHFA's loan programs.
Am I Eligible for PHFA Discounts?
- Borrowers’ liquid assets, including investments, cannot be higher than $50,000 after paying closing costs
- Household income and purchase price cannot exceed county limits
- Must make the home your primary residence (no investor properties)
- Minimum credit score of 660 for most of PHFA loan programs
- Borrowers with credit scores lower than 680 will have to complete home buyer education
For more information on other state-specific programs please give us a call at 833-600-0490, or [email protected]