Fannie Mae HomePath is a foreclosure-sale program that lets home buyers purchase foreclosed or distressed homes at significant discounts to fair market value.
A Longer Definition: Fannie Mae HomePath
HomePath is a home buyer program for purchasing foreclosed homes and short-sale homes. Homes for sale under the program are not guaranteed to be move-in ready and may require extensive repairs.
You don’t have to be a first-time home buyer to use Fannie Mae HomePath. The program is available to first-time home buyers, repeat home buyers, and real estate investors.
In exchange for purchasing a HomePath home, Fannie Mae provides mortgage incentives to eligible buyers, including an automatic $500 closing cost credit for using a conventional mortgage to finance the home.
In addition to the $500 credit, buyers can qualify for Fannie Mae’s Ready Buyer program, which gives a 3% cash contribution towards mortgage and real estate closing costs, or $3,000 per $100,000 in the purchase price.
To qualify for HomePath Ready Buyer, home buyers must:
- Complete a short, online educational program
- Earn a low- or moderate household income
Fannie Mae’s 3% Ready Buyer contribution can apply to mortgage closing costs, title and appraisal fees, state and local taxes, and mortgage discount points.
HomePath properties may include condos, townhomes, single-family homes, and multi-unit homes.
Fannie Mae HomePath Requirements
The HomePath purchase process is standardized because the seller is a U.S. government agency. Buyers will find purchasing a home from the government different from buying from a neighbor or buying For Sale by Owner.
Your offer to purchase a HomePath home may not be contingent on selling your current home
Fannie Mae does not accept offers for HomePath homes contingent upon selling another home. Buyers may not delay their HomePath closing while waiting for proceeds from another sale to transfer into a bank account.
Other contingency clauses, including mortgage, appraisal, and home inspection, are considered case-by-case.
You must be willing to close on your HomePath home within 60 days
Fannie Mae requires HomePath home buyers to move into their newly-acquired home within 60 days of closing and live in the home as a primary residence for at least one year.
Occupancy exceptions are granted on a case-by-case basis. Reasonable explanations for not moving in within 60 days of purchase include:
- Out-of-area job transfers
- Family illnesses and deaths
- Unexpected changes in family status
You must use a real estate agent to present your HomePath purchase offer
Fannie Mae is not a real estate brokerage and does not accept purchase offers directly. Offers to buy Fannie Mae HomePath homes must be submitted through a property’s listing agent or via the Fannie Mae website.
Home buyers are encouraged to hire a buyer’s agent different from the agent representing Fannie Mae on selling its foreclosed home. Real estate agents cannot equally represent both parties in a transaction because a selling real estate agent’s first responsibility is to its seller.
Using the same real estate agent as the seller is a classic first-time home buyer mistake.
Your real estate agent must use Fannie Mae’s version of the real estate sales contract
Fannie Mae has a standardized HomePath sales contract. The agency requires it. Standardized contracts help Fannie Mae evaluate offers and accept bids for foreclosed homes quickly and efficiently, which helps keep home prices low.
You must be pre-approved for your mortgage before making a financed offer on a Fannie Mae HomePath home
Except for buyers paying cash for a home, Fannie Mae does not accept offers on HomePath homes without an accompanying mortgage pre-approval.
A mortgage pre-approval letter attests that the buyer is financially-qualified to purchase a home.
Need a pre-approval? Get pre-approved now.
You must agree to purchase the HomePath home “as-is.”
Fannie Mae sells HomePath homes as-is, which means that Fannie Mae does not guarantee that the home for sale is free of defects or problems. However, many HomePath homes are in terrific condition. The agency updates homes so they can be marketed and meet local building codes.
In its HomePath sales contract, Fannie Mae highlights the potential risks of purchasing one of its properties, including mold damage, insect infestation, lead paint, and more. Fannie Mae recommends that home buyers hire an independent home inspector and purchase a home warranty policy, where available.
You must complete a homebuyer education program
Fannie Mae requires that HomePath home buyers complete an online education program on its website and pass a straightforward home buyer assessment exam. The free courseware consists of seven web-based modules viewable on a desktop, tablet, or mobile device.
How to Buy a HomePath Property
To buy a HomePath property, home buyers must follow a standardized process, which helps Fannie Mae sell more foreclosed properties to buyers more quickly.
1. Get Pre-Approved To Buy A Home
Getting pre-approved to buy a HomePath home is the first step toward purchasing a Fannie Mae foreclosed property. Pre-approvals tell Fannie Mae that the buyer is approved to buy the home for sale at its listing price.
Home buyers should never shop for homes without completing a pre-approval. Pre-approvals establish a budget and framework for finding homes to purchase. Always get pre-approved first.
2. Find a HomePath property on the Fannie Mae website
Once you’re pre-approved to buy a home, search the Fannie Mae HomePath website for properties for sale. Buyers can search by state, city, postal code, and address. Filters help sort by price, bedrooms, bathrooms, and other traits.
3. Hire a real estate agent to represent your offer
Fannie Mae requires home buyers to submit offers for HomePath homes via a real estate agent. Buyers may not represent themselves. It’s good practice to hire a real estate agent with experience negotiating HomePath offers and who does not also represent the seller, Fannie Mae.
4. Complete an approved mortgage education course
For buyers using Fannie Mae’s HomePath Buyer Ready closing cost assistance program, the next step is to complete the agency’s free, seven-module online education course. Buyers must pass an assessment exam with a score of 80 percent or better.
5. Submit and negotiate your offer to purchase
Buyers must register on the HomePath website to make a valid offer. Once an offer is submitted, buyers are asked to show proof of mortgage pre-approval and, if applicable via Ready Buyer, request closing cost assistance. Fannie Mae recommends that buyers make their best and strongest offer.
Are HomePath Homes a Good Deal?
ith these conditions and find a good listing, buying a HomePath home can be a good deal.
Common Questions About HomePath
Are HomePath homes a good deal?
HomePath homes can be a good deal, but they’re restrictive. If you can be comfortable with the program limitations, check the Fannie Mae website to see what’s for sale.
Can I purchase new construction through the Fannie Mae HomePath program?
New construction homes are typically financed by home builders and commercial lenders and not via Fannie Mae. Finding a brand-new house on the Fannie Mae HomePath website would be rare.
Can home buyers negotiate the price for a HomePath property?
Yes, home buyers can negotiate prices on Fannie Mae HomePath properties within a small range. A well-negotiated price should indicate why the offered price is lower using nearby, comparable homes.
Do I have to use a Fannie Mae conventional mortgage when I buy a HomePath property?
No, home buyers can finance their purchase of a HomePath using any available mortgage type. Conventional mortgages are not required. Low-down payment mortgages, including FHA, VA, and USDA mortgages are allowed.
How much down payment do I need to buy a home from Fannie Mae using HomePath?
HomePath doesn’t enforce a minimum down payment. Home buyers can make a 3 percent down payment via HomeReady or Home Possible programs, a 3.5 percent down payment via the FHA loan, or do 100% financing with a VA mortgage or USDA mortgage.
Can I use an adjustable-rate mortgage to purchase a HomePath home?
Yes, home buyers can finance a HomePath home with an adjustable-rate mortgage. Fannie Mae doesn’t restrict how buyers finance a HomePath home.
What maintenance does Fannie Mae perform on HomePath homes?
To keep the properties marketable, Fannie Mae performs essential services on its foreclosed and repossessed properties. Services include winterization, removal of trash and debris, repair of safety hazards, and basic interior cleaning.
Fannie Mae may also provide gutter and fence repairs, installation of exterior doors, rehanging shutters, and painting over graffiti.
What is a HomePath Renovation Loan?
The HomePath Renovation Loan is a mortgage for HomePath homes that build in up to $35,000 for home improvements and repairs. Renovation loans carry a higher interest rate than non-renovation loans and require additional approval. Eligibility varies by mortgage company.
Is Fannie Mae HomePath for first-time home buyers only?
No, Fannie Mae HomePath is available to all home buyers. You do not have to be a first-time home buyer to use HomePath.
