We’ve written previously about DC’s various homebuyer programs (DC Open Doors, EAHP etc.) that have had a significant impact on making home ownership more attainable, when it might have otherwise been out of reach (see article here)! We recently learned of two new mortgages, “Home Ready” and “Home Possible”—I know, could either of those names be more self-explanatory—that offer low down payment options for low-to-moderate income borrowers, and in some cases even to those with no credit score at all! So, what’s the catch? Well! Read below for the highlights from the fine print, and to find out if either of these mortgage options could be a good fit for achieving your home ownership goals. As always, we love chatting with you, so please don’t hesitate to reach out with any questions that Google sleuthing can’t answer!
Home Possible, Freddie Mac
| Home Possible: 95% LTV, Freddie Mac
•Maximum LTV and TLTV of 95 percent. •1-4 units, condos and planned-unit developments; manufactured homes are eligible with certain restrictions. •Down Payment can come from a variety of sources, including family, employer-assistance programs and secondary financing. •Mortgage insurance (MI) can be cancelled after loan balance drops below 80 percent of the home’s appraised value. •No cash-out refinancing option is available for borrowers who occupy the property. •Borrowers with incomes above AMI may be eligible in high-cost areas. No income limits in underserved areas. •Borrowers without credit scores are eligible for mortgages with down payments as low as five percent. |
Home Possible Advantage: 97% LTV, Freddie Mac
•Maximum LTV of 97 percent; TLTV 105 percent.1-unit properties, condos and planned unit developments; manufactured homes are not eligible. •Down Payment can come from a variety of sources, including family, employer-assistance programs and secondary financing. •Mortgage insurance (MI) can be cancelled after loan balance drops below 80 percent of the home’s appraised value. •Fixed-rate mortgages with a term of up to 30 years. •Purchase and no cash-out refinancing options available. •Borrowers with incomes above AMI may be eligible in high-cost areas. No income limits in underserved areas. •All borrowers must occupy the property as their primary residence. |
*More information on the Home Possible mortgage from Freddie Mac can be found here.
Home Ready, Fannie Mae
- Low down payment. As low as 3% down payment for home purchase and refinance transactions.
- Borrower is not required to be a first-time home buyer.
- Non-borrower household income is not counted toward income eligibility limits.
- Rental and boarder income may be considered for qualifying.
- Income eligibility requirements are simplified to 100 percent of area median income (AMI) or no income limit (for low-income census tracts).
- 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.
*More information on the Home Ready mortgage from Fannie Mae can be found here.
