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Fannie Mae HomeReady Mortgage Guidelines And Requirements

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Fannie Mae HomeReady Mortgage Guidelines And Requirements

This BLOG On Fannie Mae HomeReady Mortgage Guidelines And Requirements Was Written By Gustan Cho of GCA Mortgage Group

Fannie Mae HomeReady Mortgage
GCA Mortgage News

There are two types of home loan programs:

  • Government Loans which are home loans insured by government agencies
    • FHA, VA, USDA are government loans
  • Conventional Loans which are not insured and/or have government/agency insurance

In this article, we will cover and discuss the Fannie Mae HomeReady Mortgage Guidelines And Requirements.

Roles Of Fannie Mae And Freddie Mac

what are teh Roles Of Fannie Mae And Freddie Mac

Conventional Loans are called conforming loans because they need to conform to Fannie Mae and/or Freddie Mac Guidelines.

  • Many often get confused about why conventional loans need to meet Fannie and/or Freddie Guidelines if they are not guaranteed by the government
  • The role of Fannie Mae and Freddie Mac is to provide market liquidity to mortgage bankers and purchase loans lenders originate and fund
  • All lenders fund conventional loans with their warehouse lines of credit which is like a giant credit card
  • Once they use their warehouse lines of credit, they sell the loans and relieve their lines of credit to originate and fund more loans
  • Fannie Mae and Freddie Mac will not purchase mortgages that do not conform to their guidelines

The Federal Housing Finance Agency (FHFA) is the government regulator that regulated both Fannie Mae and Freddie Mac.

What Is Fannie Mae HomeReady Mortgage Program

What Is Fannie Mae HomeReady Mortgage Program

Fannie Mae HomeReady Mortgage is a conforming loan program created and launched by Fannie Mae to help and assist lower income home buyers and homeowners with descent credit to purchase and/or refinance their homes. Freddie Mac’s equivalent of Fannie Mae HomeReady Mortgage is called Freddie Mac Home Possible.

  • Fannie Mae does not require buyers to be first time home buyers
  • Buyers can own other real estate and qualify for Fannie Mae HomeReady Mortgage
  • Candidates need to enroll in home buyer education required (online). HomeReady offers reduced down payment on the home purchase
  • Lower private mortgage insurance premiums
  • There are Loan Level Pricing Adjustments (LLPA) for borrowers with lower credit scores
  • Maximum LLPA is capped at 1.5%
  • There are no minimum borrower contribution requirements
  • The down payment funds can be contributed by gifted funds and/or non-for-profits
  • Home buyers can purchase one to four unit owner occupant properties
  • Potential rental income on 2 to 4 units can be used as qualified income
  • Potential rental income is the income the home appraiser will note on the appraisal
  • Income from occupant household member who is not on the loan may be considered as compensating factor by mortgage underwriters

Non-occupant co-borrowers allowed but both incomes cannot exceed the qualified income limit.

Income Limits On Fannie Mae HomeReady Mortgage

what are the Income Limits On Fannie Mae HomeReady Mortgage

Fannie Mae HomeReady Mortgage income limit caps will be different depending on where the subject property is located.  Use this link to determine the income limits for Home Ready.

Fannie Mae and Freddie Mac created the Fannie Mae HomeReady Mortgage and Freddie Mac Home Possible Loan Program to promote homeownership for first time home buyers with lower to moderate household income. Both HomeReady and Home Possible are a great program for homebuyers with families who are living paycheck to paycheck and have little down payment towards a home purchase. Please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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