What is the Home Possible Mortgage?

Home Possible® is the branded name of Freddie Mac’s 3 percent down, low down payment mortgage. It’s an affordable mortgage program available to first-time home buyers, repeat buyers, and refinancing households.

Freddie Mac created Home Possible to help low- and moderate-income households achieve their American Dream of homeownership. 

The program lowers mortgage rates for eligible home buyers and subsidizes costs. Home Possible homeowners pay less to buy and own property than the typical U.S. home buyer.

Higher-income households may also qualify for Home Possible.

Who Is Eligible for the Freddie Mac Home Possible Mortgage?

There is no need to make a special or separate application for the Home Possible mortgage. Eligible mortgage applicants are entered into the program automatically.

Home Possible eligibility standards are straightforward.

You must live in the home you’re financing

Home Possible is for primary residences only. Homebuyers cannot use it to finance a second home, a rental property, or an investment. Co-signers are allowed and not required to live in the home. At least one person listed on the mortgage must live in the home.

Your home must be a 1-4 unit residence

Home Possible applies to single-family residences and multi-unit homes. Homes may be standalone or attached to another home, as with townhomes or rowhomes. Condos are eligible for Home Possible, and certain manufactured homes are eligible, too.

Your mortgage must meet conventional mortgage standards

Home Possible is a Freddie Mac mortgage program, meaning loans must meet conventional mortgage guidelines. Loans must fall within conforming mortgage loan limits, amortize over 15 or 30 years, and use a fixed-rate or adjustable-rate mortgage structure. Your income must be verifiable.

Your down payment must be at least 3%

Home Possible lets buyers finance up to 97 percent of the purchase price. Buyers must bring a minimum down payment of three percent. Home Possible lets buyers use down payment assistance from most sources, including cash gifts from family or friends, grants, employer assistance programs, second mortgages, and sweat equity.

Your income must be below average for your area

Home Possible is an affordable mortgage program. It’s available to low- and moderate-income households only. Household income for eligible buyers may not exceed eighty percent of the area median income, which mortgage applicants can verify at the Freddie Mac website. 

Home buyers who earn too much money for Home Possible can access other low-down payment loans, including Fannie Mae’s HomeReady mortgage and the Conventional 97 programs.

You may not owe money on more than one other mortgaged home

Home Possible allows home buyers to have a financial interest in one other mortgaged property, at most, which may be a vacation home or investment property. There are no restrictions on commercial property investments.

You must have a credit score of 660 or higher

Home Possible requires a minimum credit score of 660 for fixed-rate mortgages. Freddie Mac’s credit scoring uses the mortgage FICO system, which ignores medical debt and collections. 2-4 unit homes may require higher credit scores to qualify.

You must attend a homeownership education class 

Freddie Mac requires first-time home buyers to complete a homeownership education course as part of their Home Possible approval. HUD-certified homeownership classes are available online and take approximately two hours to complete. Homeownership education reduces mortgage default risk by 42 percent. 

Home Possible Mortgage Rates and Mortgage Insurance

Home Possible is an affordable mortgage program for low- and moderate-income households so eligible home buyers can access to lower mortgage rates than the general population, and pay lower mortgage insurance rates, too.

A typical Home Possible buyer will receive mortgage rates 0.25 percentage points below today’s mortgage rates. Buyers with high credit scores can receive discounts of a half-percentage point.

Home Possible also helps with private mortgage insurance (PMI).

First-time home buyers pay up to thirty basis points less for private mortgage insurance, which helps to make homes more affordable on a monthly and on-going basis.

Home Possible Income Limits

Home Possible is available to low- and moderate-income households which, to Freddie Mac, means earning no more than eighty percent of the typical household income in the home’s census tract, searchable from the the Freddie Mac website.

Home Possible Income limits vary by neighborhood. Eligible buyers get access to 3-percent-down mortgages, reduced interest rates, and lower monthly payments.

Alternatives to the Home Possible Mortgage

Home Possible is one of 7 government-backed, low down payment mortgage loans. However, not everyone will be eligible or qualify.

Here are other low-down payment mortgage options from which a home buyer can choose:

• HomeReady: A 3% down payment mortgage from Fannie Mae. Similar to Home Possible, it allows for lower credit scores.
• Conventional 100: A 100% mortgage for first-time home buyers with average credit scores or better.
• Conventional 97: A 3% down payment mortgage for buyers with higher credit scores and income.
• FHA mortgage: 3.5% down payment mortgage for buyers with lower credit scores, and buyers of 2-4 unit homes.
• USDA mortgage: 0% down payment mortgage for buyers with modest income in lower-density areas.
• VA mortgage: 0% down payment mortgage for active-duty military members, veterans, and surviving spouses.
• HomePath®: A Fannie Mae low down payment program for buyers of foreclosed homes.

See all home loans for first-time buyers.

Freddie Mac Home Possible FAQ

What is the minimum credit score for Home Possible?

Home Possible requires a 660 minimum credit score for purchases of a single-family home using a fixed-rate mortgage. Home Possible requires a higher minimum credit score when buyers use an adjustable-rate mortgage or want to buy a multi-unit property.

Can I get a Home Possible mortgage if I don’t have a credit score?

Yes, Home Possible is available to home buyers with no credit score. Mortgage lenders can approve your loan application using an alternative payment history.

What is the minimum down payment for Home Possible?

Home Possible requires a minimum down payment of three percent. Down payment money can come from any eligible source, including savings, cash gifts, employer benefits, and unsecured loans.

What is the maximum allowable debt-to-income ratio for Home Possible?

There is no explicit debt-to-income maximum for Home Possible. The program considers income, debt, credit history, and other factors for your mortgage approval. If your monthly debts exceed 43 cents for every earned dollar, other low-down payment mortgage loans may be available to you.

Is Home Possible for first-time home buyers only?

No, Home Possible is for first-time home buyers, repeat buyers, and refinancing households.

What’s the difference between Home Possible and Home Ready?

Home Possible requires higher credit scores and allows home buyers to get their down payment money from a third-party source. Fannie Mae’s Home Ready requires buyers to bring at least three percent of their own money to a purchase.

Can I use gift funds with a Home Possible mortgage?

Yes, home buyers can use cash gifts for a down payment with the Home Possible mortgage program.

Can I purchase a multi-unit home using Home Possible?

Freddie Mac’s Home Possible allows buyers to purchase 2-unit, 3-unit, and 4-unit homes. Home buyers must live in one of the home’s units.

Can I use an adjustable-rate mortgage with Home Possible?

Yes, home buyers can use adjustable-rate mortgages with Home Possible.

Can I use Home Possible if I don’t have a credit score?

Yes, home buyers without a credit score can use Home Possible to purchase a home.

Do I apply for a Home Possible mortgage with Freddie Mac directly?

No, Freddie Mac is not a mortgage lender. Home buyers can apply for Home Possible and verify their eligibility with any mortgage lender.

Do I need to make a 20% down payment with Home Possible?

No, the minimum down payment requirement with Home Possible is 3 percent.