HomeReady® Mortgages: Guidelines & Limits
We understand the financial challenges many homebuyers are facing. They can’t afford a large down payment; may have multiple student loans; or may rely on income from non-traditional sources (e.g., parents or other family members). These challenges can make homeownership seem impossible, or may have impacted their ability to buy a home in the past.
Not anymore. After much research and feedback from both homebuyers and lenders, Fannie Mae created HomeReady® mortgage, an enhanced affordable loan designed to meet the diverse financial and familial needs of responsible, creditworthy buyers.
Know the Features & Flexibilities
HomeReady mortgage addresses common financial challenges and offers expanded eligibility guidelines, such as:
Offering a 3% down payment option. First-time and repeat homebuyers can purchase a home with a down payment as low as 3% of the purchase price.
Allowing co-borrower flexibility. All borrowers do not have to reside in the property. For example, parents, who won’t be living in the home, can be co-borrowers on the loan to help their children qualify for a mortgage and purchase a home. Income limits may apply.
Accepting additional income sources. Rental payments may be considered as another allowable income source to help qualify a buyer (i.e., rental payments from a basement apartment).
Homeownership Education Requirement
We believe quality homeownership education can help buyers prepare for the responsibilities of buying and owning a home. If ALL borrowers who will occupy the home are first-time homebuyers, then at least one borrower must complete homeownership education from a qualified provider*, regardless of the loan-to-value (LTV). Buyers can complete Fannie Mae HomeView™ to fulfill the requirement**. One-on-one homeownership advising (e.g., through a HUD-approved counseling agency) may also be an option for buyers who could benefit from personalized assistance. If you seek one-on-one advising, speak with your lender beforehand to confirm that you'll meet the HomeReady mortgage education requirement.
*A qualified provider must be independent of the lender, with homeownership education content that is aligned with National Industry Standards (NIS) or is offered by a housing counseling agency approved by the U.S. Department of Housing and Urban Development (HUD).
**In circumstances when an online format may not be the appropriate option for a potential home buyer an exception may be necessary.
Exceptions to the homeownership education course requirement:
For loans that involve a Community Seconds® mortgage or down payment assistance program, buyers may complete the homeownership education course or counseling that those options require to satisfy the education requirement as long as it is provided by a HUD-approved agency and completed prior to closing.
The presence of a disability, lack of internet access, and other issues may indicate that a potential borrower is better served through other modes (e.g. in-person classroom, telephone conference call, etc.). In these situations, potential borrowers can contact the HOPE® Hotline 1-888-995-HOPE (4673) to speak with a HUD-certified counselor that can meet their needs.
Buyers who completed housing counseling prior to entering into a sales contract to buy a home are not required to complete an online homeownership education course. A completed Fannie Mae Form 1017 can be provided as evidence that housing counseling was completed.