HomeReady Versus Home Possible Mortgage Guidelines

This article covers HomeReady Versus Home Possible Mortgage Guidelines

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 and Home Possible. Both conforming loan programs were created and launched to promote homeownership by offering low down payments for home buyers. Buyers do not have to be first-time homebuyers to qualify for Fannie Mae HomeReady or Freddie Mac Home Possible. Homebuyers can borrower up to 105% CLTV of the purchase price of the home is 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.

Down Payment Requirements

Both Fannie Mae HomeReady and Freddie Mac Home Possible require a 3% down payment. Homebuyers can purchase 2 to 4 unit owner occupant units with both HomeReady and Home Possible. Differences between Fannie Mae HomeReady and Freddie Mac’s Home Possible is that with Fannie Mae, borrowers need to come up with a 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 qualifies 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

What are the guidelines for a non-tenant co-borrower

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 On HomeReady Versus Home Possible

Borrowers need to meet Conforming Guidelines. The minimum credit score to qualify is 620 FICO. 4 years after Chapter 7 Bankruptcy. 4 years after a 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 homebuyer. If there are two or more borrowers, Fannie Mae HomeReady requires one of the borrowers to complete the housing course. Gustan Cho Associates has a national reputation for not having lender overlays on government and conventional loans. GCA Mortgage also has dozens of lending relationships with non-QM and alternative financing wholesale lenders. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to their lender overlays.

For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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