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HomeReady® is the branded name of Fannie Mae’s 3 percent down, low down payment mortgage loan. It’s an affordable mortgage program for low-to-moderate income first-time home buyers.
Fannie Mae launched HomeReady in 2014. The program is an overrhaul of the MyCommunity Mortgage program, which was restrictive and limiting.
HomeReady allows for a minimum down payment of 3 percent and subsidizes mortgage rates and loan costs.
HomeReady eligibility is checklist-based. Buyers who meet each criterion are eligible for the program and assigned to it automatically.
Qualifying for HomeReady doesn’t require a separate mortgage application. Here are the requirements:
HomeReady is for primary residences only. Home buyers cannot use it to finance a vacation home, Airbnb property, or another type of investment property. Co-signers are allowed, and at least one person listed on the mortgage must live in the property.
HomeReady is for attached or detached single-family residences, including townhomes, condos, rowhomes; and multi-unit homes of four units or fewer. Manufactured homes may be eligible. Commercial properties are not allowed.
HomeReady is a Fannie Mae mortgage program, which means that loans must meet Fannie Mae’s conforming mortgage guidelines. Loan sizes must be within local conforming loan limits, buyers must provide proof of income, and loans may not be interest-only.
HomeReady allows a loan-to-value (LTV) up to 97 percent of the purchase price. Buyers must make a minimum three percent down payment, which may come from any eligible source. Eligible sources include government down payment assistance programs, cash gifts from family or friends, cash grants, and loans..
Household income for HomeReady homeowners may not exceed eighty percent of the median household income in the home’s census tract. Home buyers who earn too much money for HomeReady can access other low down payment loans, including the Conventional 97 program and the FHA 3.5% down payment mortgage.
HomeReady allows home buyers to have a financial interest in one other mortgaged property, which may be a vacation home, short-term rental property, or an investment. There are no restrictions on commercial property investments.
HomeReady requires a minimum credit score of 620 for 1-unit and multi-unit homes. Fannie Mae uses the FICO credit scoring system, which ignores medical debt and collections.
Fannie Mae requires first-time home buyers to complete a homeownership education course as part of a HomeReady approval. The mortgage agency offers an online educational course called HomeView at no cost. Homeownership education reduces mortgage default risk by 42 percent.
Fannie Mae created HomeReady in 2014 to help low- and moderate-income renters achieve their American Dream of homeownership, where low-to-moderate income is defined as earning less annual income as compared to your closest neighbors.
Home Ready home buyers may not earn more than eighty percent of their new home’s census tract’s income. Fannie Mae makes income limits available on its website as shown below.
Home Ready can be used in city, suburban, and rural areas. It lowers down payment requirements to 3 percent, drops mortgage rates to less expensive levels, and makes owning a home cheaper, faster, and easier.
Verify your HomeReady eligibility with a mortgage pre-approval.
When Fannie Mae first announced its HomeReady mortgage in 2014, the agency advertised the program as a mortgage for multi-generational households. It permitted boarder income from parents, grandparents, and children, all living under one roof and contributing to monthly payments.
The program expanded several years later to allow accessory dwelling units (ADU).
An accessory unit is an area with a kitchen and a bathroom within another home, usually with its own entrance.
Accessory units may be in the basement, above the garage, or attached to the subject property. ADUs may also be separate homes on the land of an existing property.
Home buyers can use income from boarders and accessory units to qualify for a HomeReady mortgage.
With boarder income, buyers can use payments received, dollar-for-dollar, as income toward the mortgage. Proof of payment can be in the form of canceled checks, Venmo or other digital transfers, or bank statements that show deposits into a bank account.
Income from accessory dwelling units cannot be used dollar-for-dollar as income on an application. Lenders will deduct 25% from rent collected on an ADU to account for vacancies and costs. Home buyers are recommended, but not required, to use signed lease agreements that prove their rental income.
HomeReady is an affordable mortgage program that offers subsidized mortgage rates to low- and moderate-income households.
A HomeReady buyer with average credit scores gets access to mortgage rates 0.25 percentage points below standard conventional rates. Buyers with high credit scores receive rates discounted by as much as 0.75 percentage points.
In addition, HomeReady discounts private mortgage insurance for eligible buyers. The typical HomeReady homeowner pays less for PMI and saves hundreds of dollars on mortgage insurance annually.
Because Fannie Mae discounts mortgage rates and private mortgage insurance, HomeReady home buyers save as much as $700 per $100,000 borrowed per year compared to standard mortgage borrowers.
HomeReady is one of 7 government-backed, low down payment mortgage loans. With its lower credit score requirements and flexible income guidelines, HomeReady favors first-time buyers.
However, HomeReady isn’t suitable for everyone.
If you decide that HomeReady is non-optimal or unavailable to you, here are other low down payment mortgage options for first-time home buyers:
See all home loans for first-time buyers.
Also, as a first-time buyer, you may qualify for federal home buyer tax credits and local down payment assistance. Get pre-approved to check your eligibility.
Fannie Mae’s HomeReady allows lower credit scores and higher debt-to-income ratios than Freddie Mac’s Home Possible and lets home buyers apply boarder and accessory unit income to their application.
HomeReady | Home Possible | |
Minimum Down Payment | 3% | 3% |
Minimum Credit Score | 620 | 660 |
First-Time Buyers | Yes | Yes |
Income Limitations | Yes | Yes |
Boarder Income | Allowed | Not Allowed |
ADU Income | Allowed | Not Allowed |
PMI Discounts | Yes | Yes |
HomeReady requires a 620 minimum credit score. HomeReady uses the mortgage FICO scoring system. Learn more about the credit score needed to buy a home.
Yes, mortgage applicants can add other people to a HomeReady mortgage application, such as parents or relatives, who are willing and financially able to assist with the mortgage but will not live in the home.
No, signed leases aren’t required to use boarder income and income from an ADU. However, without a signed lease or proof of contract, a home appraiser will assign a rent price on your behalf, which may be less than what you collect.
Yes, HomeReady is available to home buyers with no credit score.
HomeReady requires a 3% minimum down payment. Down payment money can come from any eligible source, including savings accounts, cash gifts, employer benefits, and unsecured loans.
HomeReady enforces a strict 50% debt-to-income limit.
HomeReady is available for first-time home buyers, repeat home buyers, and refinancing households.
Yes, HomeReady mortgage guidelines allow cash gifts for a down payment.
Yes, HomeReady allows the purchase of a 2-4 unit property so long as the buyer lives in one of the home’s available units. Multi-unit homes require larger down payments. 2-unit homes require a fifteen percent down payment, and 3-4 unit homes require a twenty-five percent down payment.
Yes, home buyers can use the HomeReady mortgage for community land trusts that meet Fannie Mae’s approval standards.
Yes, home buyers can use adjustable-rate mortgage financing with HomeReady.
No, Fannie Mae is not a mortgage lender. Apply for your mortgage with a mortgage lender. Your application will be considered for HomeReady automatically.
No, HomeReady doesn’t require a 20% down payment. Home buyers may put down as little as 3 percent as part of their HomeReady approval.
Fannie Mae offers free, qualifying homeownership education through its HomeView website.
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HomeReady® is the branded name of Fannie Mae's 3 percent down, low down payment mortgage loan. It's an affordable mortgage program for low-to-moderate income first-time home buyers.
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