HomeReady Loan

HomeReady Loans – First Time Home Buyer Program

• Low interest rates
• 3% down payment
• Gift for down payment
• 620 minimum credit score
• Seller paid closing cost up to 3%

The HomeReady mortgage is a conventional loan program created by Fannie Mae. It’s affordable given the smaller 3% to 5% down payment requirement. Home Ready mortgages are designed for low to moderate-income home buyers and are well-suited for first time homebuyers.

Therefore unlike government-insured loans HomeReady borrowers will have the option to cancel their mortgage insurance once their home equity reaches 20%. This will result in lower monthly payments down the road.

Down Payment

With the HomeReady cash for down-payment and closing costs can come from multiple sources including gifts, grants and Community Seconds with no minimum personal funds required.

For the down payment you can use gift funds or cash on hand if you’re buying a one-unit property and none of the funds have to come from you. The eligibility of cash as a source of down payment is rare in lending guidelines and one of the great benefits of this loan.

Credit

Above all a credit score of 620 is required for the HomeReady mortgage.

Chapter 7 or 11 Bankruptcy

Time elapsed must be 4 years, or greater, from the discharge or dismissal date

Chapter 13 Bankruptcy

Time elapsed must be 2 years, or greater, from the discharge date and 4 years for dismissal

Foreclosure

Time elapsed must be 7 years, or greater, after completion

Deed-in-Lieu of Foreclosure or Short Sale

Time elapsed must be 4 years, or greater

Income

In addition the amount of income you are allowed to make in order to qualify for the HomeReady loan will depends on the area that you live. In any area, you are not able to make more than 100% of the average median income for that area in order to qualify if the home is not located in a low-income census tract. If it is located within a low-income area there is no limit to the amount of income you can make.

Income Limits

After that the HomeReady income limits are determined by the county that the home you plan to purchase resides. Fannie Mae has a very simple tool called the HomeReady income eligibility lookup tool which allows you to enter the street address to get the exact amount of income you are allowed to make.

Mortgage Insurance

Similarly the program’s reduced mortgage insurance coverage requirement results in lower mortgage insurance costs for qualifying HomeReady borrowers. They also benefit from:

• Expanded income flexibilities with nonoccupant borrowers and nonborrower household members
• A combined loan-to-value (CLTV) ratio of up to 105%, enabling borrowers to use Community Seconds^® to cover a down payment and closing costs*

Homeownership Education

In conclusion the HomeReady mortgage has a homeownership education requirement to help buyers prepare for the responsibilities of buying and owning a home. Buyers will need to complete an online homeownership course offered by Framework to fulfill the requirement. One on one homeownership course may also be an option for buyers who could benefit from personalized assistance. If you seek one on one course speak with us to confirm that you’ll meet the education requirement.

Counseling should occur as early as possible and before a buyer selects a home. Required components must be completed before a buyer enters into a contract to purchase a home.