Freddie Mac HomeOne Mortgage Loan Program

In this blog, we will cover the Freddie Mac HomeOne Mortgage Loan Program. Fannie Mae and Freddie Mac are the two government-sponsored enterprises (GSE). Freddie Mac and Fannie Mac sets the guidelines and lending requirements for conventional loans. The role of Fannie Mae and Freddie Mac is to provide market stability and liquidity by purchasing mortgages from lenders. Freddie Mac and Fannie Mae are two different agencies but both have the same purpose. The main purpose of Freddie Mac and Fannie Mae is to provide liquidity in the housing market by buying mortgage loans funded by mortgage lenders. By buying mortgage loans from lenders, lenders have money to fund more loans. This is how Americans can purchase homes with a low down payments at competitive rates.

What is the Role of Freddie Mac and Fannie Mae?

In order for Fannie or Freddie to purchase conventional loans, the mortgage needs to conform to Fannie Mac 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 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.

What is Freddie Mac HomeOne Mortgage Loan

The Freddie Mac HomeOne mortgage is a conventional loan product designed to help first-time homebuyers finance their homes. This mortgage solution was introduced to provide an affordable and accessible financing option for those entering the housing market. Here are some key features and requirements of the HomeOne mortgage:

Key Features of Freddie Mac HomeOne Mortgage

Freddie Mac HomeOne Mortgage Loans are conventional loans. In this section, we will cover the key features of Freddie Mac HomeOne Mortgage Loans:

• Low Down Payment: HomeOne allows for a down payment as low as 3%, which makes it easier for first-time homebuyers to obtain a mortgage without a substantial upfront investment.
• No Geographic Restrictions: Unlike other loan programs targeting specific geographic areas, HomeOne mortgages are available for properties located anywhere in the United States.
• Flexible Funding Sources: The program allows for various sources for the down payment, including personal savings, gifts, and grants. This flexibility can make it easier for borrowers to gather funds needed for closing.

Cancellation of Mortgage Insurance: Like other conventional loans, borrowers can request to cancel their private mortgage insurance (PMI) once they reach 20% equity in their home, unlike FHA loans where mortgage insurance premiums may be required over the life of the loan depending on the down payment and loan terms.

Freddie Mac HomeOne Eligibility Requirements

The property must be owner-occupied. This means the borrower must live in the home as their primary residence. The mortgage must be a fixed-rate loan. Adjustable-rate mortgages (ARMs) are not eligible under the HomeOne program. At least one borrower must be a first-time homebuyer, which Freddie Mac defines as someone who has not owned a home in the last three years. To qualify for a HomeOne loan, first-time homebuyers are usually required to complete a homebuyer education course if all borrowers are first-time buyers.

Credit Score and Underwriting

Borrowers must meet certain credit score requirements and undergo a thorough underwriting process. The exact credit score requirement can vary by lender, but typically, a score of 620 or higher is needed to qualify. The loan must conform to Freddie Mac’s loan limits, which vary by area. In most of the U.S., the 2024 limit for a single-family home is $766,550 (this amount adjusts annually).

Comparison with Other Freddie Mac Products

HomeOne is often compared to Freddie Mac’s Home Possible mortgage, another popular product for low to moderate-income homebuyers. While both offer low down payments and flexible terms, Home Possible has additional income limits. It is not solely restricted to first-time homebuyers. HomeOne offers fewer restrictions, making it more broadly accessible for any first-time homebuyer, regardless of income level.

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 in a 3% down payment. Freddie Mac HomeOne has no maximum income limit caps. Other loan programs do have maximum income limit caps.

How Does The Freddie Mac HomeOne Loans Benefit Homebuyers

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.

Freddie Mac HomeOne Loans are conventional loans, therefore, conventional loan guidelines apply. 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 at 80% LTV. All 30-year fixed-rate FHA loans require an annual MIP of 0.85% for the life of the loan. Conventional loans allow Income-Based Repayment (IBR) whereas FHA loans do not.

How Do You Qualify For Freddie Mac HomeOne?

Borrowers need to meet all conventional loan guidelines: One borrower needs to be a first-time homebuyer. A first-time homebuyer is defined as a borrower who had no ownership of 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.

Does Freddie Mac HomeOne Require Homebuyer Education?

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 of a home in the past three years. Only one of the borrowers needs to be a first-time homebuyer.

What Is The Difference Between Home Possible and HomeReady

A frequently asked question is what is the difference between home possible and HomeReady? HomeReady is easier when it comes to getting an homeowner education certificate. HomeReady has much lenient educational requirements which means more homebuyers interested in the Home Possible Mortgage Program. The Home Possible program benefit homebuyers who need non-occupant co-borrowers.

Home Ready Non-Traditional Income Guidelines

Non-traditional income is allowed on Home Ready Mortgage Programs. Both the Home Possible and HomeReady mortgage programs 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.

Is There an Income Limit on Freddy Mac Home Ready and Home Possible?

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.

What Are The Benefits of Home Possible and HomeReady?

The Freddie Mac HomeOne mortgage is tailored for first-time homebuyers looking for a conventional loan with a low down payment and flexible funding options. It’s an excellent tool for those who meet the criteria and want to make their first step into homeownership more affordable and manageable. If you are considering this option, speaking with a lender who can provide specific details and guide you through the qualification and application process is beneficial. Here are the benefits of the Home Possible and HomeReady mortgage programs:

• • 3% down payment
  • 2 to 4 unit multi-family requires a 5% down payment as long as one of the units is owner-occupant
  • Homebuyers do not have to be first-time homebuyers

Freddie Mac HomeOne Lenders With No 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 national mortgage company with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Gustan Cho Associates are also experts in helping borrowers with Non-QM loans. Non-QM loans are non-conforming loans that benefit homebuyers who otherwise would not qualify for a government or conventional home mortgage.