If you’re buying a home in Washington State and want a conventional loan with a low down payment, Fannie Mae’s HomeReady® mortgage is worth a close look. It offers 3% down, reduced mortgage insurance, and flexible qualifying guidelines — including the ability to count income from household members who aren’t on the loan.
HomeReady is one of the strongest low-down-payment conventional options available, and for many buyers it’s a better long-term fit than FHA financing.
HomeReady at a Glance
- Minimum down payment: 3%
- Minimum credit score: No minimum credit score required for loans run through Fannie Mae’s Desktop Underwriter (DU) — at least one borrower must have a credit score on file. Fannie Mae evaluates the full risk profile rather than applying a hard floor. Higher scores generally result in better pricing.
- Income limit: 80% of Area Median Income (AMI) for the property location
- Property types: Primary residence only; 1–4 unit properties, condos, planned unit developments
- Mortgage insurance: Required under 20% down; can be canceled once you reach 20% equity
- First-time buyer required: No — open to repeat buyers who meet income limits
- Homebuyer education: Required for at least one borrower
Income Limits for HomeReady in Washington State
To qualify for HomeReady, your total qualifying income must be at or below 80% of the Area Median Income (AMI) for the census tract where the home is located — not where you currently live. In King County, the AMI is among the highest in the state, which means the 80% threshold is considerably higher in dollar terms than it would be in a lower-cost county. Many buyers are surprised to find they still qualify even with solid household incomes. Use Fannie Mae’s AMI Lookup Tool to check the income limit for a specific address. Enter the property address and it will show you the applicable AMI and the 80% HomeReady threshold for that census tract or contact me and I’ll help review this for you. One important nuance: if the property is located in a low-income census tract, there may be no income limit at all. Your loan officer can check this for a specific address.Flexible Income Counting — Including Household Members Not on the Loan
One of HomeReady’s most useful features is how broadly it counts income for qualifying purposes:- Co-borrower income: A co-borrower doesn’t need to live in the home — their income can still be counted toward qualifying
- Non-borrower household income: Income from a parent, adult child, or other household member who won’t be on the loan can be used as a compensating factor during underwriting — it doesn’t count toward the 80% AMI limit
- Boarder income: If someone rents a room in your home and has done so for at least 12 months, that rental income may be counted
- Accessory dwelling unit (ADU) income: Rental income from an ADU on the property may also be considered
Mortgage Insurance on HomeReady vs. FHA
This is where HomeReady can save you real money over time compared to an FHA loan.- HomeReady PMI: Reduced mortgage insurance rates compared to standard conventional loans; PMI can be canceled once you reach 20% equity through payments or appreciation
- FHA MIP: For most FHA loans with less than 10% down, mortgage insurance remains for the life of the loan — the only way to remove it is to refinance into a conventional loan
Down Payment Sources
HomeReady is flexible about where your down payment comes from:- Personal savings
- Gift funds from family
- Down payment assistance programs
- Grants from eligible organizations
- Community Seconds (subordinate financing from approved sources)
Homebuyer Education Requirement
At least one occupying borrower must complete a homeownership education course before closing. This is typically fulfilled through Fannie Mae’s Framework online course, which takes about 4–6 hours and can be completed at your own pace. The cost is nominal. I recommend waiting on taking the course until you’ve reviewed your scenario with a mortgage advisor to assure that it’s the course that you’ll need.HomeReady vs. Home Possible vs. HomeOne
| Feature | HomeReady (Fannie Mae) | Home Possible (Freddie Mac) | HomeOne (Freddie Mac) |
|---|---|---|---|
| Minimum Down Payment | 3% | 3% | 3% |
| Income Limits | 80% AMI | 80% AMI | None |
| First-Time Buyer Required | No | No | At least one borrower |
| Minimum Credit Score | None (DU) | None (LPA) | None (LPA) |
| Mortgage Insurance | Reduced; cancelable | Reduced; cancelable | Standard; cancelable |
| Non-Borrower Household Income | Yes — compensating factor | Limited | No |
| Gift Funds Allowed | Yes | Yes | Yes |
| Down Payment Assistance Compatible | Yes | Yes | Yes |
| Available for Refinances | Yes | Yes | Yes |
| Homebuyer Education Required | When all borrowers are first-time buyers | When all borrowers are first-time buyers | When all borrowers are first-time buyers |
Frequently asked questions
What is the HomeReady mortgage?
HomeReady is a Fannie Mae conventional loan program that lets qualified buyers purchase a home with as little as 3% down. It features reduced mortgage insurance, flexible income guidelines including non-borrower household income, and is available to both first-time and repeat buyers who meet income limits.What credit score is needed for a HomeReady loan?
As of November 2025, Fannie Mae removed the hard minimum credit score requirement for HomeReady loans submitted through Desktop Underwriter (DU). At least one borrower must have a credit score on file, but DU evaluates your full financial profile rather than applying a hard floor. Higher credit scores generally result in better pricing and terms.What are the income limits for HomeReady in Washington State?
HomeReady requires your total qualifying income to be at or below 80% of the Area Median Income (AMI) for the census tract where the home is located. In high-cost areas like King County, the 80% AMI threshold is higher in dollar terms than most of the country. Use Fannie Mae’s AMI Lookup Tool at ami-lookup-tool.fanniemae.com to check limits for a specific address.What is the minimum down payment for a HomeReady loan?
The minimum down payment for HomeReady is 3%. Down payment funds can come from personal savings, gift funds, down payment assistance programs, grants, or Community Seconds financing. There’s no minimum personal contribution requirement when a grant is used.Can HomeReady mortgage insurance be canceled?
Yes. Unlike FHA mortgage insurance, which remains for the life of the loan in most cases, HomeReady PMI can be canceled once you reach 20% equity in the home through loan paydown or appreciation.Is HomeReady only for first-time home buyers?
No. HomeReady is available to both first-time and repeat buyers, as long as they meet the income limits and other program requirements.Can income from household members not on the loan be used for HomeReady?
Yes. Income from a non-borrower household member — such as a parent or adult child living in the home — can be used as a compensating factor during underwriting. It doesn’t count toward the 80% AMI income limit and doesn’t go on the loan itself, but it can help strengthen a borderline application.What is the difference between HomeReady and Home Possible?
Both HomeReady (Fannie Mae) and Home Possible (Freddie Mac) are 3%-down conventional programs with 80% AMI income limits. Key differences include how they handle non-borrower household income, sweat equity, and rental income. HomeReady allows non-borrower household income as a compensating factor in underwriting. The best program for you depends on your specific situation — I’m happy to walk through which one fits.Is a homebuyer education course required for HomeReady?
Homeownership education is required when all occupying borrowers are first-time homebuyers. It can be completed through Fannie Mae’s free HomeView course or the Framework online course. Borrowers who complete HUD-approved housing counseling within 12 months before closing may also qualify for a loan-level price adjustment credit.Is HomeReady Right for You?
HomeReady is worth exploring if you:- Have income at or below 80% of AMI for your target area
- Want a conventional loan with a low down payment and cancelable PMI
- Are buying in a multi-generational household or have household members contributing to income
- Want to pair a low down payment with Washington State down payment assistance
