Wanting to buy a home and being in a position to do so are two different things. When you’re bringing home a smaller paycheck, home ownership can seem like an impossible dream but Fannie Mae is helping to change that. The recently launched HomeReady Program is aimed at helping low income buyers get the financing they need. Here’s a quick rundown of how the program works.
What is HomeReady?
The HomeReady Program is an initiative from Fannie Mae, a leading source of mortgage financing in the U.S. This program is designed for credit-worthy low and moderate income buyers who want to buy homes in designated low income, minority or disaster-impacted communities. In that way, it’s similar to the USDA loan program, which is meant to help lower income buyers who are shopping around in rural areas.
What are the benefits for buyers?
Compared to a conventional loan or even FHA financing, the HomeReady Program offers some unique benefits that are geared towards buyers who aren’t making a ton of cash. For example, qualified buyers can take advantage of competitive pricing, which means you’re not going to be stuck with a higher interest rate on your mortgage just for using the program.
This program also allows buyers to use cash gifts for down payment funds and the down payment requirement is capped at 3%. That’s less than the 3.5% required by FHA loans and the 20% down that’s recommended for a conventional loan. Loans issued through the HomeReady Program require mortgage insurance but you can get it cancelled once your loan-to-value ratio drops below 78%.