Buying A Home Home Loans

How Fannie Mae’s HomeReady Program Helps Low Income Home-Buyers

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%.

Best of all, the HomeReady Program offers some flexibility where credit scores are concerned. If your credit history is nonexistent, you could still qualify for a loan based on non-traditional financial history, such as a record of making rent or utility payments on time.

Who’s eligible?

The HomeReady Program is open to first-time and repeat buyers but there are some specific guidelines you’ll have to meet in order to get a loan. In terms of credit, the minimum score needed is 620, unless you have no credit history in which case Fannie Mae would use other means to assess your creditworthiness.

Aside from that, the home you want to buy has to be in a designated area that’s approved by the program. You can use the HomeReady address lookup tool to determine whether the house you have your eye on fits the bill.

Lastly and most importantly, you have to be income eligible to get a mortgage through the program. In general, your income has to be equal to 80% of the area median income in the census tract where you’re buying a home. In some areas, however, the limit increases to 100% or Fannie Mae imposes no limit at all. These are areas where the majority of residents are either low income or belong to a minority group.

Keep in mind that for purposes of this program, Fannie Mae takes into account the income of all the people living in your household, regardless of whether they’re name is going to be listed on the mortgage. That’s something to be aware of since it could affect your eligibility.

Before you apply

Before you apply for a HomeReady loan or any other mortgage, there are a few things you need to do first, starting with checking your credit. If you’re clueless about where your credit’s at, take our quick 2-minute assessment to see where you stand.

Calculate how much of a loan you can afford based on your income and any other debt payments you’re making. Work on paying down your debt, which can reduce your monthly outflow and improve your credit in the process. Finally, focus on setting some money aside in savings to cover your down payment and closing costs.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website,


  • Hello All,

    I have been with the Credit Solution Program since 2012. I must say I am quite honoured to be able to have ” doors ” open to me that were unattainable in the past.
    I read all the information Mike sends my way, through The Credit Solution Program and he is a genius !
    The tools he enables you to use at your convenience, and time frame do work. You must put forth the effort to he,p yourself as well.
    Listen to his wisdom of Credit, Banks, Mortgages, and especially your Credit Report. These subjects are his maven. He has proven, time and time again, to me anyway, that if you follow his instructions, his advice or his ” storues” ( which are fabulous examples) you will be in a great position to raise your Credit Score.

    I’ve been with the Credit Solution Program since 2012, as I mentioned, and I still find his advice valuable, interesting, and most of true.
    My chapeau is off to all of you associated with the Credit Solution Program. 🙂
    Thank you for keeping me abreast of the” solutions”, that various questions come across my desk. I am a life member. The Credit Solution Program teaches me something new with every e-mail I receive.
    Listen and follow the instructions on how to increase your Credit score:)

  • Wonderful for a Government home buyer program.

    I know a program that requires NO DOWN PAYMENT, has interest set at one of the lowest rates available and the is NO PMI INSURANCE REQUIRED. This program is available to anyone who can commute for a few meetings to one of their offices around the Nation. It is offered through a group known as the Neighborhood Assistance Corporation of America (NACA).

    To find out more about this BETTER HOME OWNERSHIP PROGRAM you can goto http://WWW.HTTPS//NACA.COM . Note: They also have a program designed to help buyers who want to reduce their monthly payments for any number of reasons.

    • One thing I should add. NACA will require you to submit a lot of paperwork and a family budget. THERE IS NO REQUIREMENT TO HAVE GOOD CREDIT AND DO NOT RELY UPON CREDIT SCORES TO MAKE THE LOAN. This is possible through prior arrangements NACA has with multiple lendors t hat allows them to verify ability to pay without having to submit good credit information to lenders. I know people who have successfully used this program but be ware they require a lot of paperwork and it can take several months before they have everything in order and will submit you to their lenders.

      In this case PATIENCE PAYS OFF if you want to save all the PMI insurance money and not make a down payment. 🙂

      • Lastly do not let the paperwork requirement get to you. You will have to submit much of the same paperwork to conventional lenders anyway. Nonw of it is hard to get or to complete, most of the paper you need can be downloaded to the NACA website or carried into an office. Most of the paper you need will be things like bank statements, income tax, credit accounts, bill payments and etc.

        The only real pain to any of this is setting aside a few hours to collect everything and submit it to NACA. None of this is really hard to and I like to refer to it as SIMPLY ANNOYING.

        This is when it is good to remind yourself that many things in life are SIMPLY ANNOYING. Anyone can find time and patience to complet this process with NACA if you are really wanting to buy a home you could otherwise not qualify to purchase.

  • Dear Sir money’s not the problem cleaning this low debt out of the way.
    I went this lex law firm said that they would help me clear my debt they didn’t.
    Less then 6000 dollars has me living a partial life.
    Fining money for a house is not it I’am Vet.
    I need help in cleaning my credit scores.
    I did a dumb thing I went for some pay day loans when I really did not need them. Now with their high percentage they have me tied down.
    I’am working full time.
    With my low credit scores getting a loan to cover all debt’s with a low interest low is next to impossible.
    What can I do help, help!

    Edward H Crutcher

    • Hi Ed!

      I hope you don’t mind me calling you Ed sir.

      I am in now way associated with this program or the folks who work there. This is a program I have been following for many months, actually for several years now. I FEEL GOOD ABOUT THE CREDIT SOLUTION PROGRAM and what it offer the community.

      Now to what I wanted to tell you. Any program that offers to help will require some time from you and information you need to put together.

      you have never said you did not do this but this is what happens with many people. They enroll in a program expecting results yet they do not take time to furnish the information required for a group to be able to help you get things fixed. ALL I INTENDED HERE IS TO LET EVERYONE KNOW THEY WILL HAVE TO DO A FEW THINGS FOR ANYONE TO HELP THEM CLEAN UP AND RE-ESTABLISH GREAT CREDIT. It is a small price to pay for the reward you will receive.

    • Go look at NACA.COM !

      They do not require a down payment, do not use your credit to get approvals, they offer the lowest interest rates and YOU DO NOT HAVE TO PAY FOR PMI INSURANCE. PMI insurance will raise the amount of your payments significantly, you are far better off without having to purchase this insurance.

  • I am desperatly interested in this programplease consider me to participate in this program as i have been victim of id theft as well as going thru a divorce. My phone number is **********

      • Sam, please consider letting people know about some of the non-government programs for home purchase. Many communities have them and some are Nation wide.

        NACA.COM is one of those programs that I personally know works. I have 2 different friends who have been successful going through their program.

        • Hi Monty,
          Thank you for the recommendation! I have sent it to our writers. Look for an article on this soon!

    • Hi John!
      Thanks for reading! We offer lots of advice on how to better your score with our program, The Credit Solution Program. You can also continue reading our blog for free, or contact our affiliates at Credit Pros by calling 855-980-4898 for personal, one-on-one assistance. Best of luck fixing your credit!

  • Can you tell me why it is that the three credit companies that report your credit can continue to have things that were written off or its been over 37 yrs how they continue these things on your credit report? Not to mention I went to court in 1985 , yes 1985 and the judge told me it was now taken care of me being a victim of fraud and yet here we are in 2016 and nothing has been resolved. I was told to sue all three of these companies for blocking me from credit by using things from 1985 …what can I do? Thank you kelly

    • You should call the Lexington Law firm. They are expert lawyers who handle credit problems and will get you cleaned up in a year or less depending how much stuff you have on your CR.

  • Hello, my name is Arvy Santoya. I previously previewed a link to rent to own homes I believe. The Danny Mar sounds wonderful. The mentioned link is no longer available. Can you provide me with some information regarding rent to own properties?

    • Hi Arvy,
      Thanks for reading! I’m afraid I don’t know which link you’re talking about. Was it in this article? Could it have been from a different website? I’d like to help but I am not finding anything. Sorry!

  • Yes I am. interested in this program my name is Ruben Robertson I am working with the program now straight out my credit I have a decent job and I make a decent income I like the find out more information and regards to this program my phone number 773-454-3673 I also would like to know what all I need to get started with this program soon as possible

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