Meet the diverse needs of today’s home buyers with Fanny Mae's new affordable lending product!
The HomeReady mortgage enhanced affordable lending product, designed for creditworthy low- to moderate-income borrowers, with expanded eligibility for financing homes in low- income, minority, and disaster-impacted communities.
Key Features
- Innovative underwriting flexibilities expand access to credit responsibly. Flexibilities include: Income from non-borrower household members considered as a compensating factor in Desktop Underwriter (DU) to allow for a debt-to-income (DTI) ratio >45%, up to 50%. Rental income from accessory dwelling units, Non-occupant borrowers, such as a parent, uncle or friend may be considered in qualifying the borrower.
- Financing up to 97% loan-to-value (LTV) for purchase of one-unit principal residence (DU is required for LTV ratios >95%) and up to 95% LTV for limited cash-out refi.
- Borrower is not required to be a first-time buyer, it could be your 3rd or 4th home.
- Cancellable mortgage insurance (restrictions apply); lower MI coverage (25% for LTVs >90% to 97%) compared with standard requirements.
- Gifts, grants, Community Seconds, and cash-on-hand permitted as a source of funds for down payment and closing costs.
- Nontraditional credit is allowed.
- Supports manufactured housing up to 95% and Home Style Renovation (approved lenders) up to 95%.
Borrower Benefits:
- Low down payment. Up to 97% LTV financing for home purchases.
- Flexible sources of funds. Can be used for the down payment and closing costs with no minimum contribution required from the borrower’s own funds (1-unit properties).
- Affordable and cancellable monthly MI. Reduced MI coverage requirement above 90% LTV; cancellable MI per Servicing Guide policy.
- Homeownership course. The online Framework course prepares borrowers for sustainable homeowner- ship; other education and advising options are available
Borrower Income Eligibility:
HomeReady is available when purchasing or refinancing any single-family home, as long as the borrower meets the income limits of the property location. (Income eligibility limits may help lenders meet applicable Community Reinvestment Act goals.)
- No income limit: Properties in low income census tracts
- 100% of AMI: Properties in his minority census tracts and designated disaster areas AMI=area median income
HomeReady requires that one borrower on each loan do one of the following prior to the note date:
- Complete the Framework homeownership education course. Borrowers invest a few hours of their time and pay a modest fee of $75 (paid directly to Framework) to learn the fundamentals of buying and owning a home. To further promote sustainability, borrowers will have access to post-purchase homeownership support through Framework's homeownership advisor service. -or-
- Receive pre-purchase housing advising from a HUD-approved nonprofit housing counseling agency (as evidenced by a signed Certificate of Completion of Pre-Purchase Housing Counseling (Form 1017)). As part of our commitment to help borrowers who are facing complex challenges, later in 2016 lenders will begin offering a $500 loan-level price adjustment credit when borrowers take advantage of pre-purchase housing advising from a HUD-approved homeownership advisor. -or-
- Complete a homeownership education course required by a Community Seconds or down payment assistance program that is provided by a HUD-approved agency, if the HomeReady loan involves a Community Seconds or down payment assistance program.
