This ARTICLE On Freddie Mac HomeOne Conventional Loan Guidelines On Purchases Was PUBLISHED On November 16th, 2019
Fannie Mae and Freddie Mac are the two government-sponsored enterprises (GSE).
- The role of Fannie Mae and Freddie Mac is to provide market stability and liquidy by purchasing mortgages by lenders
- In order for Fannie and/or Freddie to purchase conventional loans, the mortgage needs to conform to Fannie Mac and/or Freddie Mac Guidelines
- If the mortgage does not conform, Fannie and/or Freddie will not purchase the conventional loans
- Lenders need to sell the mortgage loans they fund so they can clear their line of credit so they can originate and fund more loans
- Both Fannie and Freddie are coming up with new loan programs to promote homeownership for home buyers, especially first-time homebuyers with a low down payment
- Freddie Mac HomeOne Conventional Loans is one such program that is popular among first time home buyers
In this article, we will cover and discuss Freddie Mac HomeOne Conventional Loan Guidelines On Purchases.
Freddie Mac HomeOne Down Payment Guidelines
Freddie Mac HomeOne is a special conventional loan program that benefits homebuyers with only a 3% down payment required.
- Freddie Mac HomeOne is a newly created conventional loan program
- It allows home buyers to put a 3% down payment
- Freddie Mac HomeOne has no maximum income limit caps
Other loan programs do have maximum income limit caps.
Who Benefits From Freddie Mac HomeOne Mortgage Programs
The Freddie Mac HomeOne is a conventional loan program where home buyers only need a 3% down payment.
- Homebuyers can purchase homes anywhere in the United States
- The loan program has no maximum income limit caps
- Freddie Mac HomeOne allows up to 105% combined loan-to-value with Affordable Seconds
- Homebuyers can purchase single-family homes, townhomes, and condominiums
- No minimum contribution by the borrower is required
- Conventional loans have no upfront mortgage insurance premium
- Annual private mortgage insurance can be canceled 80% LTV
- All 30 year fixed-rate FHA loans require annual MIP of 0.85% for the life of the loan
Conventional loans allow Income-Based Repayment (IBR) where FHA loans do not.
Qualification Requirements
Borrowers need to meet all conventional loan guidelines:
- One borrower need to be a first-time homebuyer
- A first-time homebuyer is defined as a borrower who had no ownership in a home for the past three years
- must be a first-time homebuyer when the mortgage is a purchase transaction.
- One unit properties (including Planned Unit Developments (PUD) and condominiums) are eligible
- Need automated approval determined by the Automated Underwriting System – Loan Product Advisor
- Gift funds are acceptable from family members
Freddie Mac HomeOne Home Buyer Education Certificate
All borrowers need to complete an online first-time homebuyer course which is the CreditSmart course. The home purchase needs to be an owner-occupant primary resident. Purchasing the mortgaged premises. First-time homebuyers are defined as someone who did not have ownership in a home in the past three years. Only one of the borrowers needs to be a first-time homebuyer.
Home Possible Versus HomeReady Mortgage Programs
Both the Home Possible and HomeReady mortgage program allow a 3.0% down payment on a home purchase.
- This is substantially lower than the 3.0% down payment loan program with FHA
- The purpose of these loan programs is to compete with FHA loans by promoting homeownership for low and moderate-income families
- 97% loan to value
- Eligible properties are one unit single-family homes, townhomes, PUDs, and Warrantable Condominiums
2 to 4 unit multi-family units are eligible with a 5% down payment.
Maximum Income Guidelines
Income Limits for Home Possible and HomeReady
The Home Possible and HomeReady conventional loan programs were created and implemented to promote homeownership to first-time homebuyers and too low and/or moderate-income homebuyers.
- Borrowers can use the Home Possible Income and Property Eligibility tool to see if they meet the income guidelines
- Borrowers can utilize the Area Median Income Lookup Tool for the HomeReady mortgage program
Borrowers need to meet all other conventional mortgage guidelines.
Benefits Of The Home Possible And HomeReady Mortgage Program
Here are the benefits for the Home Possible and HomeReady mortgage program:
- 3% down payment
- 2 to 4 unit multi-family requires a 5% down payment as long as one of the units are owner-occupant
- Homebuyers do not have to be first-time homebuyers
Qualifying For A Mortgage With A Direct Lender With No Lender Overlays
Gustan Cho Associates Mortgage Group has no lender overlays on government and conventional loans. We have zero overlays on FHA, VA, USDA, and Conventional loans. Over 75% of our borrowers are folks who could not qualify at other lenders due to their lender overlays. If you need to qualify for a mortgage with a direct lender with no overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.