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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 PUBLISHED On June 5th, 2019

Freddie Mac Home Possible Mortgage Guidelines And Requirements
Gustan Cho Associates

Freddie Mac Home Possible Mortgage UPDATE By Michael Gracz, National Sales Manager at Gustan Cho Associates at Loan Cabin Inc.

  • Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans
  • We offer all sorts of loan programs, including Freddie Mac home possible mortgage loans
  • Freddie Mac announced updates to the Freddie Mac Home Possible Mortgage Guidelines on April 3rd, 2019

In this blog, we will detail those changes and when they go into effect. We do our best to keep our readers informed on any changes made to the programs we offer.

Freddie Mac Home Possible Mortgage Loan Program Defined

What is Freddie Mac home possible mortgage?

  • Freddie Mac home possible is a loan program put in place to offer a low down payment option to qualify borrowers
  • It is an alternative to FHA financing
  • Loan officers love this program for their clients!
  • They have the ability to use Lender Paid Mortgage Insurance to lower the overall mortgage payment

Please check out this video from Freddie Mac;

Features Of Freddie Mac Home Possible Mortgage

Features Of Freddie Mac Home Possible Mortgage
Gustan Cho Associates

What are some features of the home possible mortgage product?

  • The main feature of this product is it only requires a 3% down payment for a single-family home!
  • 3% is even lower than the FHA 3.5% requirement!
  • You may use the home possible loan product to purchase a 1 to 4 unit property, condo, or planned unit development (PUD)
  • With certain restrictions, you may also purchase a manufactured home
  • Above and beyond only needing a 3% down payment, the down payment may come from a variety of sources including gifts from family members, employer assistance programs, secondary financing, and even sweat equity

Fees And Costs Of Freddie Mac Home Possible Mortgage Versus Other Loan Programs

Fees And Costs Of Freddie Mac Home Possible Mortgage Versus Other Loan Programs
Gustan Cho Associates

Interest rates and fees – the home possible product does offer potential borrowers lower fees.

  • Credit fees are capped and less than standard fees for all loans over 80% loan to value
  • Interest rates associated with these loan products are typically lower than your everyday conventional mortgage
  • This offers clients a great opportunity to save over the life of the loan

Freddie Mac Home Possible Mortgage Options And Terms

Freddie Mac Home Possible Mortgage Options And Terms
Gustan Cho Associates

Mortgage flexibility options :

  • The home possible mortgage may be used with a 15, 20, 25, or 30-year fixed rate mortgage
  • There are also adjustable rate mortgages available
  • (ARMs) 5/1, 5/5, 7/1, and 10/1 ARMs allowed

Freddie Mac Home Possible Mortgage For Homeowners Needing Refinancing

Freddie Mac Home Possible Mortgage For Homeowners Needing Refinancing
Gustan Cho Associates

Refinance options:

  • Many of our clients do not know you may utilize this Freddie Mac product to refinance your property
  • This will be a rate and term option for borrowers who occupy the property
  • Cash Out refinances are not available with this product

Income Limits And Caps

Income Limits And Caps
Gustan Cho Associates

Income Limits – Unlike FHA, the home possible program DOES have income limits.

  • There are certain areas where income limits do not exist, usually in low-income areas from census data
  • Luckily, Freddie Mac has made it easy to check the income limits for a specific property
  • Use their lookup tool, HOME POSSIBLE INCOME LIMIT LOOK UP
  • This will provide the exact date for the entire United States

Freddie Mac Home Possible Mortgage Guidelines On Credit Scores

Freddie Mac Home Possible Mortgage Guidelines On Credit Scores
Gustan Cho Associates

Borrowers without credit scores reporting are eligible:

  • Just like FHA, qualified borrowers without credit scores are eligible for the home possible product
  • The same 3% down payment requirement applies
  • Borrowers without credit scores must utilize non-traditional credit
  • For more information please see our NON-TRADITIONAL CREDIT BLOG

Freddie Mac Home Possible Mortgage On Non-Occupant Co-Borrowers

Freddie Mac Home Possible Mortgage On Non-Occupant Co-Borrowers
Gustan Cho Associates

Non-occupying co-borrower hours are allowed:

  • This is very similar to an FHA loan
  • Utilizing the home possible product, a non-occupying home borrower can contribute to the borrower’s funds for the down payment and closing costs

Mortgage Insurance Guidelines

Mortgage Insurance Guidelines´╗┐
Gustan Cho Associates

MORTGAGE INSURANCE:

  • You may notice the words mortgage insurance are in capital letters
  • That is because this is one of the biggest advantages of utilizing this loan program
  • Unlike FHA mortgage insurance when putting down 3.5%, mortgage insurance never goes away
  • Mortgage insurance can be canceled loan balance drops to 80% of the home’s appraised value
  • Since this is a conventional mortgage, once you have a 20% Equity position in your home, your mortgage insurance goes away
  • This alone will save you thousands of dollars over the life of the loan compared to an FHA mortgage
  • An FHA mortgage, when putting down 3.5%, has mortgage insurance for the entire life of the loan
  • The only way to cancel that mortgage insurance is to complete a refinance into a conventional loan, which does cost you money
  • Your interest rate may even go up depending on the market

Freddie Mac released a short clip to go over this feature in more detail.

Changes In Freddie Mac Home Possible Mortgage Guidelines

Changes In Freddie Mac Home Possible Mortgage Guidelines
Gustan Cho Associates

Old Freddie Mac Home Possible Mortgage Guidelines:

  • A borrower may qualify for the home ready product even if they have ownership in ONE additional financed residential property
  • Meaning even if they own another home with a mortgage, they may still utilize this program
  • Remember, to utilize this program, you do not need to be a first-time home buyer

New UPDATED Freddie Mac Home Possible Mortgage Guidelines:

  • The new rule was announced on April 3rd, 2019 it will go into effect on July 3rd, 2019
  • With the advice from the FEDERAL HOUSING FINANCE AGENCY, occupying borrowers may now have an ownership interest in more than TWO financed properties including the subject property
  • This will allow more Americans to utilize the home possible program

While this change may not be dramatic, it is a step in the right direction. At Gustan Cho Associates, we are dedicated to offering our clients as many different loan products as possible. We do not have any LENDER OVERLAYS on FHA, VA, or Conventional mortgages. We offer a full slate of NON-QM mortgages and DOWN PAYMENT ASSISTANCE programs. Even if you have been turned down by another lender, we encourage you to reach out to us. We are available 7 days a week, in the morning or evening. Please contact Mike Gracz on 630-659-7644 or text us for faster response. Or email us at mgracz@gustancho.com for more information.

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