Low-Income Loan Programs

Understanding HomeReady and HomePossible Loans for First-Time Homebuyers

If you’re a first-time homebuyer looking for an affordable mortgage option, HomeReady and HomePossible loans could be great solutions. These programs, backed by Fannie Mae and Freddie Mac, are designed to help buyers with low to moderate incomes achieve homeownership with flexible guidelines and lower down payment requirements. Let’s break down how each program works and what you need to qualify.

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HomeReady Loan (Fannie Mae)

Key Features:
✅ Low Down Payment: Just 3% down required, making it easier to afford a home.
✅ Flexible Income Sources: Non-borrower household income can be considered to help with qualification.
✅ Reduced Mortgage Insurance: Mortgage insurance is more affordable compared to standard conventional loans and can be canceled once equity reaches 20%.
✅ Credit Score Requirements: Typically, a 620+ credit score is required, though better rates are available with higher scores.
✅ Homebuyer Education: First-time buyers must complete a simple online homeownership course.

Who Qualifies?

• First-time and repeat homebuyers with income at or below 80% of the area median income (AMI).

• Must use the home as a primary residence (no second homes or investment properties).

• No significant ownership of other properties in the past three years.

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HomePossible Loan (Freddie Mac)

Key Features:
✅ Low Down Payment: Also requires just 3% down, similar to HomeReady.
✅ Flexible Credit & Income Guidelines: Allows co-borrowers who don’t live in the home to help qualify.
✅ Mortgage Insurance Perks: Lower-cost private mortgage insurance (PMI) that can be canceled once you reach 20% equity.
✅ Alternative Credit Options: Can consider non-traditional credit history (such as rent payments) if you lack a standard credit score.
✅ Homebuyer Education: Required for first-time buyers to ensure a smooth homeownership experience.

Who Qualifies?

• First-time and repeat buyers with incomes at or below 80% of AMI.

• Buyers looking to purchase a single-family home, condo, or manufactured home as a primary residence.

• Borrowers who may have limited traditional credit history but demonstrate responsible financial behavior.

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How to Decide Which Loan is Best for You

Both programs offer similar benefits, but here’s a quick comparison to help you decide:

• If you need flexible income sources (like boarder income or household member income), HomeReady is a great fit.

• If you need a non-occupying co-borrower to help you qualify, HomePossible is a better choice.

• If you’re looking for the lowest mortgage insurance costs, both programs offer reduced premiums.​

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Next Steps

If you’re considering a HomeReady or HomePossible loan, the best step is to connect with a mortgage professional who can evaluate your eligibility and walk you through the process. These programs make homeownership more accessible, and with the right guidance, you can take advantage of these great opportunities to secure your first home.

Would you like help determining if you qualify? Let’s talk!