Fannie Mae will be increasing the income limits for HomeReady effective July 16, 2016 making it easier for more people to qualify for this mortgage program.
Income limits for this program are determined by census tracts. Current guidelines have three “buckets” for income limits using the area median income (AMI) for that census tract, including census tracts that have no income limits (designated low income areas); census tracts that are designated with a high minority population or are in a disaster zone with income limits of 100% of the AMI; with the remaining census tracts limited to 80% of the AMI.
Effective July 16, 2016, Fannie Mae will no longer have the 80% AMI limit. New income limits will be:
- 100% of area median income (AMI)
- No income limits for census tracts in designated low income areas/
The HomeReady mortgage program allows:
- reduced down payment
- reduced mortgage insurance premiums
- improved pricing for mortgage rates. Credit scores above 680 have no LLPAs (price adjustments). 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 must be existing with documented rental income at the property for at least 12 months.
- 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
By the way, you do not have to be a first time home buyer and Fannie Mae’s HomeReady program is available for refinances too!
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