The HomeReady Mortgage is a mortgage program created by Fannie Mae intended to help low-to-moderate income borrowers with good credit buy or refinance a home.
Here are more details about the HomeReady Mortgage:
- you do not need to be a first time home buyer.
However, you cannot own another property at closing. (It’s fine if a non-occupant borrower (co-signer) owns another property.UPDATE 7/27 – you CAN now own other property and qualify for HomeReady.
- home buyer education required (online).
- reduced down payment
- reduced private mortgage insurance premiums
- reduced price hits (LLPA’s). Credit scores above 680 have no LLPAs. Credit scores below 680 have a cap of 1.5% for price hits.
- no minimum borrower contribution. Funds for down payment can come from gifts or Community Seconds.
- rental income from accessory dwelling units (aka mother-in-law apartments) may be considered for qualifying.
- rental income from a boarder may be considered. The boarder (aka room-mate) must be existing with documented rental income of shared residency with the borrower.
- available for 1 – 4 unit homes. There are different requirements for 2-4 unit homes.
- rental income may be used for 2-4 unit homes. Borrower must occupy one unit.
- income from a non-borrower household member (someone who lives in the home and is not on the loan application) may be considered as a compensating factor for qualify.
- income from a non-occupant borrower (aka a co-signer) may be allowed. The non-occupant borrower’s income will be subject to any applicable income limits.
Speaking of income limits…
UPDATE effective July 18, 2016: INCOME LIMITS HAVE CHANGED. The “80% AMI” census tracts have been increased to “100% AMI”.
Income limits vary depending on what census tract the property is located. Use this link to determine the income limits for Home Ready.
- Census tracts that are designated low income have no income limits. There are currently 87 census tracts in King County and 77 in Pierce County that qualify as low income and therefore do not have income limits.
- Census tracts that are designated with high minority population or in a disaster zone have income limits based at 100% of AMI (area median income).
All other census tracts are at 80% of AMI.
This is really a great program for borrowers to consider and I’m pleased to be able to offer HomeReady to my clients.