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Fannie Mae HomePath: What Home Buyers Should Know
Fannie Mae HomePath is a unique foreclosure-sale program backed by mortgage giant Fannie Mae. Through HomePath, renters and buyers can purchase foreclosed or distressed homes at significant discounts to fair market value.
However, buying a home from Fannie Mae differs from purchasing a home from your neighbor. HomePath homes are typically inexpensive and not guaranteed to be move-in ready. HomePath homes may require repairs.
Learn more about the Fannie Mae HomePath program, its requirements, and what to expect when buying a HomePath home.
- → What Is HomePath?
- → Who Can Buy a Fannie Mae HomePath Property?
- → Fannie Mae HomePath Requirements
- → When To Choose a HomePath Property?
- → What is the HomePath Ready Buyer Program?
- → How to Buy a HomePath Property
- → Are HomePath Homes a Good Deal?
- → Alternatives to HomePath
- → Frequently Asked Questions About HomePath
What Is HomePath?
HomePath is a home buyer program for purchasing foreclosed homes and short-sale homes.
The Fannie Mae website lists HomePath homes for sale. Fannie Mae rehabilitates many of the homes before selling them and offers special mortgage incentives to eligible buyers, including closing cost contributions.
Home buyers can purchase HomePath homes with cash or use mortgage financing. The program allows conventional, FHA, VA, and USDA mortgage types and portfolio products such as jumbo loans.
Fannie Mae gives buyers a $500 closing cost discount using a conventional fixed-rate or adjustable-rate mortgage. Buyers can also qualify for a 3% cash contribution toward the mortgage or closing costs using the HomePath Ready Buyer program.
Who Can Buy a Fannie Mae HomePath Property?
Any home buyer can purchase a Fannie Mae HomePath property. There are no rules against being a first-time home buyer, making a small down payment, or owning multiple homes.
Properties are available in all 50 states and may include condos, townhomes, single family homes, and multi-unit properties.
Fannie Mae HomePath Requirements
Purchasing a HomePath home is standardized because the seller is a U.S. government agency. Buyers will find their home search to be less flexible and with clear restrictions about sales contracts and home repairs.
Fannie Mae enforces the following restrictions:
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 contingencies, 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.
Fannie Mae grants exceptions to its HomePath occupancy rules 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 from HomePath home buyers 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 real estate agent different from the agent who represents Fannie Mae on the sale of its foreclosed home. Real estate agents cannot equally represent both parties in a transaction because a listing real estate agent’s first responsibility is to its seller.
Sharing the seller’s real estate agent is one of first-time home buyers’ top mistakes.
Your real estate agent must use Fannie Mae’s version of the real estate sales contract
Fannie Mae has a standardized sales contract for HomePath homes. The agency requires home buyers and their real estate agents to use 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 for HomePath homes without an accompanying mortgage pre-approval letter.
A strong pre-approval letter attests that the buyer is financially-qualified to purchase the home and eligible for mortgage financing. Home buyers can get their mortgage pre-approved online anytime.
You must agree to purchase the HomePath home “as-is.”
Fannie Mae sells its foreclosed HomePath homes as-is, which means that Fannie Mae does not guarantee that the home you’re buying is free of defects or problems.
Many Fannie Mae HomePath homes are in terrific condition. The agency will make repairs so a home can be marketed and may update a home to meet local building codes.
Still, HomePath-eligible homes may require major repairs after purchase.
In its HomePath sales contract, Fannie Mae highlights the potential risks of purchasing one of its properties, including the presence of 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 HomePath home buyers to complete an online education program on its website and pass a straightforward home buyer assessment exam.
The courseware is free and consists of seven web-based modules viewable on a desktop, tablet, or mobile device.
Get pre-approved for a mortgage today.
When To Choose a HomePath Property?
Fannie Mae HomePath is available to first-time home buyers, repeat home buyers and real estate investors. There are no special financing requirements, and buyers can secure an automatic $500 closing cost credit for mortgaging via a conventional Fannie Mae home loan.
With a low down payment HomeReady mortgage, first-time buyers can use HomePath to buy homes with discounted rates, closing costs, and mortgage insurance.
What is the HomePath Ready Buyer Program?
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 purchased.
To qualify for Ready Buyer, home buyers must:
- Buyers must complete a short, online educational program
- Buyers must earn a low- or moderate household income
Fannie Mae’s Ready Buyer contribution can pay mortgage closing costs, title and appraisal fees, state and local taxes, and optional mortgage discount points.
How to Buy a HomePath Property
Buying a Fannie Mae-owned HomePath home differs from buying an ordinary home or a new construction property. Buyers must follow a standardized process for Fannie Mae, which helps the agency sell more foreclosed properties to buyers more quickly.
Here are the five steps for buying a Fannie Mae HomePath home.
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
After 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.
Properties listed as First Look are available to individuals who plan to make the home their primary residence only. Other properties are available for purchase by everyone, including investors, vacation home buyers, and speculators.
3. Hire a real estate agent to represent your offer
Fannie Mae requires that home buyers submit offers for HomePath foreclosed properties through its HomePath website via a real estate agent. Home 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, after which Fannie Mae will issue a completion certificate to share with your HomePath real estate agent.
5. Submit and negotiate your offer to purchase
Fannie Mae’s HomePath website requires buyers to register with the agency to make an offer on a home. When an offer is submitted, buyers must show proof of mortgage pre-approval and, if applicable, make their request for closing cost assistance.
Fannie Mae provides a timeline for its acceptance decisions. Buyers may modify their offers until the deadline has passed. Fannie Mae recommends that buyers make their best and strongest offer.
Are HomePath Homes a Good Deal?
HomePath homes can be a good deal for home buyers. However, they won’t meet everyone’s home-buying goals. Here’s why:
HomePath homes are foreclosure properties. They are homes that the government repossessed to re-sell to the public at a discount.
Buying foreclosed homes is different from purchasing non-distressed homes and new construction properties. HomePath buyers may face some or all of the following:
- Sales may not close as quickly as non-HomePath homes
- Homes may be defective and not in move-in ready condition
- Homes may not be for sale in your preferred area
- Homes may not be available in your price range
- Homes may require costly repairs
In addition, Fannie Mae restricts how HomePath sales contracts get written. It does not accept offers for HomePath properties contingent on the sale of a prior home, and buyers must purchase HomePath as-is.
If you can be comfortable with these conditions and find a good listing, buying a HomePath home can be a good deal.
Get pre-approved for a mortgage today.
Alternatives to HomePath
HomePath is a housing program to promote homeownership within communities. It is not a mortgage program.
Fannie Mae started HomePath during the 2008 foreclosure wave when large corporations purchased distressed homes and turned them into rentals. Fannie Mae knew that locally-owned homes are better for neighborhoods and community outcomes, so it created HomePath to promote local homeownership.
HomePath gives local home buyers a first look at foreclosed homes for sale and provides incentives to purchase homes at a discount. HomePath can be combined with a standard home mortgage to create a low-down payment, low-priced home purchase.
The default mortgage for a HomePath purchase is Fannie Mae’s HomeReady mortgage loan.
In addition to a $500 closing cost credit paid by Fannie Mae, using HomeReady gives buyers access to lenient credit scoring, relaxed standards for income qualification, and a minimum down payment of just 3 percent.
Home buyers can use any of the following mortgages to finance a HomePath home purchase:
- HomeReady: 3 percent down payment, 620 minimum FICO score, subsidized interest rates, and mortgage insurance payments. A $500 closing cost credit is applied to purchase a Fannie Mae HomePath home. Fannie Mae backs HomeReady.
- Home Possible: 3 percent down payment, 660 minimum FICO score, subsidized interest rates, and mortgage insurance payments. Freddie Mac backs Home Possible.
- Conventional 97: 3 percent down payment, 620 minimum FICO score. Fannie Mae and Freddie Mac back Conventional 97.
- FHA Mortgage: 3.5 percent down payment with 580 minimum FICO score.
- USDA Mortgage: 100% financing with 620 minimum FICO score. Available in lower-density areas such as suburbs and rural areas to buyers of modest homes.
- VA Mortgage: 100% financing with 620 minimum FICO score. For active-duty military members, veterans of the armed services, and surviving spouses.
Frequently Asked Questions About HomePath
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. Buyers should not expect to “lowball” a HomePath property for sale. A well-negotiated price should indicate why the offered price is lower using nearby, comparable homes. Buyers must submit purchase offers via the HomePath website. Fannie Mae permits buyers to revise their offers until the stated purchase offer deadline.
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, FHA, VA, and USDA loans are allowed. Buyers whose mortgage lenders arrange for a Fannie Mae-backed conventional loan receive a $500 credit toward closing costs from Fannie Mae.
How much down payment do I need to buy a home from Fannie Mae using HomePath?
HomePath doesn’t enforce a minimum down payment because HomePath is a homes-for-sale program, not a mortgage loan. Home buyers can make a 3 percent down payment via the government’s HomeReady and Home Possible programs, a 3.5 percent down payment via the FHA loan, or no down whatsoever through the USDA and VA home loan programs.
Can I use an adjustable-rate mortgage to purchase a HomePath home?
Yes, home buyers can use an adjustable-rate mortgage to finance a HomePath home. Buyers can also use a fixed-rate mortgage. HomePath is a home-sale program and not a mortgage loan program. Fannie Mae doesn’t restrict how buyers finance HomePath homes.
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.
- 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 so ask your lender about its requirements.
Can I find HomePath homes on real estate sites like Zillow/Redfin?
Third-party real estate websites such as Zillow and Redfin may list HomePath homes for sale. However, third-party websites may be inaccurate and out-of-date. Home buyers can only purchase a HomePath via the Fannie Mae HomePath website.
Is Fannie Mae HomePath property 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 buy a home via HomePath.
Get pre-approved for a mortgage today.