HomeReady by Fannie Mae
Conventional low down payment option designed to help low to mid income households to finance a home with a reduced down payment option, reduced mortgage insurance, and less price adjustments for lower credit score borrowers and property types.
Eligibility requirements:
- Qualified income limit of 80% of AMI (Area Median Income) per Income Eligibility Look-up Tool.
- Minimum FICO score of 620.
- No requirement to be a first-time homebuyer, but homeownership education is required prior to closing for at least one borrower if all occupying borrowers are first-time homebuyers.
- Temporary Buydowns available if paid by lender or seller on purchase.
- Eligible community seconds allowed to 105% CLTV
- Gift funds eligible for the entire down payment.
- 3% down available for site built single family homes, condos and PUDs.
- Manufactured homes require 5% down.
- Program allows use of boarder income (room and board paid by an established roommate that will live in the home) Borrower roommate monthly rent up to 30% of their loan qualified income can be used to qualify.
- Income from Accessory Dwelling Unit (ADU) can be used to qualify. (75% of fair market rent). The ADU must provide for living, sleeping, cooking, and bathroom facilities and be on the same parcel as the primary one-unit dwelling.
Q and A
Q: Is there a conventional 3% down option for borrowers with income over the 80% of AMI?
A: Yes, Income limits do not apply on conventional purchase loans 95.01-97% LTV if at least one borrower is a first-time homebuyer.
Q: What is the definition of a first-time homebuyer.
A: A First-time Homebuyer is an individual who has had no ownership in a principal residence during the previous 3-year period. An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations, such as owning a mobile home in a trailer park.
Q: To use rent from a roommate, does the space used by the roommate need to comply with the definition of an ADU?
A: No if the borrower has at least 12 months of established history living with a roommate that will occupy the new home with the borrower, the home does not have to have separate living, sleeping, cooking and bathroom facilities. In fact, the boarder income can be from a spouse that will not be on loan.
