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HomeReady Versus Home Possible Mortgage Guidelines

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HomeReady Versus Home Possible Mortgage Guidelines

This BLOG HomeReady Versus Home Possible Mortgage Guidelines Was PUBLISHED On March 20th, 2019

Many home buyers often contact us at Gustan Cho Associates and want to know the difference between HomeReady Versus Home Possible.

  • HomeReady conventional loans are offered by Fannie Mae
  • Home Possible conventional loans are offered by Freddie Mac
  • There is no major difference between Fannie Mae’s HomeReady Versus Home Possible
  • Both conforming loan programs were created and launched to promote homeownership by offering low down payment for home buyers
  • Home buyers do not have to be first time home buyers to qualify for Fannie Mae HomeReady or Freddie Mac Home Possible
  • Home buyers can borrower up to 105% CLTV of the purchase price of the home if combined with a second mortgage loan
  • Fannie Mae and Freddie Mac are two separate Government Sponsored Enterprises (GSE) so these two loan programs are not exactly the same

We will discuss Fannie Mae HomeReady Versus Home Possible on this blog.

Down Payment Requirements

Both Fannie Mae HomeReady and Freddie Mac Home Possible require 3% down payment.

  • Home buyers can purchase 2 to 4 unit owner occupant units with both HomeReady and Home Possible
  • Differences between Fannie Mae HomeReady versus Home Possible is that with Fannie Mae, borrowers need to come up with 3% down payment borrower contribution when buying 1 to 4 unit multi-family units

Freddie Mac does not mandate borrower contribution when buying 1 to 4 unit properties.

Types Of Properties Allowed With HomeReady And Home Possible

One to four unit owner-occupant properties qualify for both Fannie Mae HomeReady and Freddie Mac Home Possible.

  • Second homes and investment properties are not eligible for HomeReady and Home Possible financing
  • Non-Occupant borrowers are allowed if the loan-to-value is at 95% LTV or lower
  • Single-family homes, townhomes, PUD, condos, and two to four unit homes are eligible properties

Non-warrantable condos and condotels do not qualify.

Non-Occupant Co-Borrower Guidelines

Fannie Mae and Freddie Mac allow non-occupant co-borrowers. NON-Occupant co-borrowers do not have to be related to main borrowers like FHA Loans. Both Fannie/Freddie allows boarder income as qualifying income. If the borrower has a history of having a roommate for at least the past 12 months and the roommate has been paying rent, that rental payment can be counted as qualified income.

Borrower Eligibility Requirements

Borrowers need to meet Conforming Guidelines. Minimum credit scores to qualify is 620 FICO. 4 years after Chapter 7 Bankruptcy. 4 years after deed in lieu of foreclosure and/or short sale. 7 year waiting period after standard foreclosure. 2 years after Chapter 13 Bankruptcy discharged date. 4 years after Chapter 13 dismissal date. Both Fannie Mae and Freddie Mac have educational completion requirements. Freddie Mac Home Possible Advantage lets borrowers skip the mandatory housing education course if at least one of the borrowers is not a first time home buyer. If there are two or more borrowers, Fannie Mae HomeReady requires one of the borrowers to complete the housing course.

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