Freddie Mac Home Possible

Freddie Mac Home Possible Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers Freddie Mac Home Possible Mortgage Guidelines. 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 about the revised income limits for 2024. 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

The maximum LTV ratio allowed for Home Possible mortgages is 97%. This means borrowers can finance up to 97% of the property’s value. The property being financed must be the borrower’s primary residence. It cannot be used for investment or rental purposes. In this article, we will discuss and cover Freddie Mac Home Possible Mortgage Guidelines.

Qualification Requirements on Freddie Mac Home Possible

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The financed property must meet certain eligibility requirements, including being a one- to four-unit primary residence, meeting minimum property standards, and complying with Freddie Mac’s guidelines. Borrowers must have a maximum income limit depending on the property’s location. These limits are typically set at 80% of the area median income (AMI). However, in high-cost areas, they may be higher. The maximum 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

Freddie Mac’s Home Possible mortgage program is designed to help low- to moderate-income borrowers purchase a home with a down payment as low as 3%. Here are some general guidelines for the Home Possible program. Homebuyers can put a 3% down payment on the home purchase or appraised value, whichever is lower. The down payment can come from various sources, including savings, gifts, grants, or loans.  Get qualify for your mortgage on Freddie Mac Home

Freddie Mac Home Possible Mortgage Guidelines Homebuyer Education

Freddie Mac encourages borrowers to complete a homebuyer education course better to understand the homebuying process and their responsibilities as homeowners. It’s important to note that these guidelines are subject to change, and specific eligibility requirements may vary based on individual circumstances and lender overlays. Prospective borrowers should consult with a mortgage lender or loan officer for the most up-to-date information and to determine their eligibility for the Home Possible program.

Acceptable Down Payment Sources For Freddie Mac Home Possible Mortgage Guidelines

What sources of a down payment are acceptable?

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

Terms of Freddie Mac Home Possible Mortgage Loans

What type of terms is available with home possible?

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

Borrowers’ total monthly debt payments, including the mortgage payment, should not exceed a certain percentage of their gross monthly income. A 45% or lower debt-to-income ratio is recommended, although higher ratios may be allowed with compensating factors.

Freddie Mac Home Possible Mortgage Guidelines on Credit Score Requirements

While Home Possible has no minimum credit score requirement, borrowers with higher credit scores may qualify for better interest rates and terms.  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. Borrowers must pay if their down payment is less than 20% of the home’s purchase price. However, Freddie Mac offers options for reducing or eliminating mortgage insurance premiums under the Home Possible program.

Freddie Mac Home Possible Mortgage Guidelines on Income Limits

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?

  • Single-family homes
  • Condo Units
  • PUD’s

Why Is Freddie Mac Home Possible So Popular

Why are so many borrowers using Home Possible? One of the main concepts that draw borrowers to this program is the cancellable mortgage insurance. Homebuyers 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 a 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 $766,550 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.

Freddie Mac Home Possible Mortgage Guidelines and Eligibility Requirements

Here are a few general requirements: Must be a first-time homebuyer. Must reside in the property as your primary residence. Have not had an ownership interest in a residential property, within three years prior to your application date. Max debt to income ratio will be determined by the 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 contact us at Gustan Cho Associates at 800-900-8569 or text for a faster response. Or email us at  Either I or one of my teammates will help you with any questions you might have about Home Possible.  Get qualify for your mortgage with no overlays

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