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Freddie Mac Home Possible Mortgage Guidelines And Requirements

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Freddie Mac Home Possible Mortgage Guidelines And Requirements

This BLOG On Freddie Mac Home Possible Mortgage Guidelines And Requirements Was Written By Michael Gracz of GCA Mortgage Group

Home Possible Is Freddie Mac’s 3% to 5% down payment solution to purchasing a new home. This program is targeted to low to moderate-income borrowers. Stay tuned for blogs to come on Gustan Cho Associates Mortgage News about the revised income limits coming out July 29th, 2018. This program is also designed to help buyers in high cost and under-served and lower income communities.

We will dive into the two programs available:

  • Freddie Mac Home Possible
  • Home Possible Advantage.

Qualification Requirements On Freddie Mac Home Possible

Home Possible –

MAX loan to value with the Freddie Mac Home Possible Mortgage program is 95% (loan-to-value)

What properties can you use home possible for?

  • Single family homes
  • Condo Units
  • PUD’s
  • Manufactured homes (certain restrictions)
  • Two to Four Unit Dwellings

What sources of down payment are acceptable?

  • Borrowers own funds
  • Gifts from family members
  • Employer assistance programs
  • Secondary financing such as home equity line of credit

What type of terms are available with home possible?

  • 15 to 30 year fixed rate mortgages
  • 5/1, 5/5, 7/1, 10/1 adjustable rate mortgages

What are the credit score requirements?

  • 620 credit score or higher
  • Borrowers without credit score reporting are eligible for mortgages with as little as 5% down payment

Are there income limits with home possible?

  • Yes, there are Income Limits
    • Visit HOME POSSIBLE INCOME LIMIT Lookup Tool and check out your area
    • Borrowers above the am I may be eligible in areas that are considered high cost
    • Borrowers in underserved areas do not have income limits

Freddie Mac Home Possible Advantage Mortgage Program

Home Possible Advantage

MAX LTV 97% (loan-to-value)

What properties can you use home possible for?

  • MUST BE PRIMARY RESIDENCE
  • Single family homes
  • Condo Units
  • PUD’s

What sources of down payment are acceptable?

  • Borrowers own funds
  • Gifts from family members
  • Employer assistance programs
  • Secondary financing such as home equity line of credit

What type of terms are available with home possible?

  • Only fixed rate mortgages up to 30 years

What are the credit score requirements?

  • 620 credit score or higher
  • Borrowers without any credit score reporting are eligible for mortgages with as little as 5% down payment

 

Are there income limits with Home Possible?

  • Yes, there are Income Limits
    • Visit HOME POSSIBLE INCOME LIMIT Lookup Tool and check out your area
    • Borrowers above the am I may be eligible in areas that are considered high cost
    • Borrowers in underserved areas do not have income limits

Why Is Freddie Mac Home Possible So Popular

Why are so many borrowers using Home Possible?

  • One of the main concepts that draws borrowers to this program is the cancellable mortgage insurance
  • Home buyers also do not have any upfront mortgage insurance premiums to pay, which is not the case when using FHA financing
  • Mortgage insurance is cancellable once you have a 20% equity position in home
  • Meaning mortgage loan is now at 80% LTV (loan-to-value). this is a huge advantage over an FHA loan with 3.5% down payment because that mortgage insurance stays with you throughout the entire loan, costing you money over the life of the loan
  • The mortgage insurance rates are also lower when utilizing the Home Possible program versus standard conventional financing
  • Another reason many borrowers are using the Home Possible product are the higher loan limits compared to FHA requirements
  • Home Possible will go up to the conforming loan limit which is $453,100 for most counties in the United States
  • This product can be used in high balance areas. please check out this tool for the CONFORMING LOAN LIMITS in the area

Guidelines And Requirements

Here are a few general requirements: 

  • Must be a first-time home buyer
  • Must reside in the property as your primary residence
  • Have not had ownership interest in a residential property, within three years prior to your application date
  • Max debt to income ratio will be determined by LP AUS System
    •  Generally, that is 45% back and debt to income ratio

What items do I need to start the process?

 

  • Last 60 Days Bank Statements – to source down payment
  • Last 30 Days Pay Stubs
  • Last Two Years W2’S
  • Last Two Years Tax Returns
  • Driver’s License

If this product sounds like something that can help you or your family please reach out to Gustan Cho Associates Mortgage Group. Feel free to call me, Mike Gracz, directly on 630-659-7644 or text for faster response. Either myself or one of my teammates will help you with any questions you might have about Home Possible.

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