What is a HomeReady Mortgage?

The HomeReady Mortgage program is a loan option offered by the Government Sponsored Enterprise (GSE) Fannie Mae. This program provides prospective borrowers with both an affordable and educational mortgage experience. HomeReady mortgages offer affordable and cancellable mortgage insurance, as well as a low 3% down payment and flexible co-applicant options. This sounds all well and good, but why else should you consider the HomeReady Mortgage program?

Why HomeReady Mortgage?

As previously mentioned, the HomeReady Mortgage program is intended to be an affordable mortgage option. It offers perks not only like minimum 3% down and cancellable mortgage insurance, but also moderate credit requirements and financing up to 97% loan-to-value. This program may be best for you if you are a low-to-moderate income earner with limited savings for a down payment. Although it is recommended to be a first-time homebuyer, you can still qualify for HomeReady as a repeat buyer. You can even opt to use the HomeReady program to refinance and receive more favorable loan terms.

HomeReady Income Limits and HomeReady Credit Limits

Since it is intended to offer low-to-moderate income earners an affordable mortgage, there are certain income and credit limits that prospective HomeReady borrowers must meet. For example, applicants are expected to have a credit score of at least 680 – what is typically considered a “fair” credit score. Income limits are based on geographic area, and borrowers are required to have an income of no greater than 100% of the Area Median Income (AMI). Luckily, Fannie Mae offers a map tool to check an area’s income limits.

Co-Applicant Criteria

The main selling point of the HomeReady Mortgage to those seeking an affordable mortgage is the program’s flexible co-applicant requirements. Non-occupant co-applicants are perfectly acceptable, opening the door for relatives to help borrowers manage the weight of a mortgage’s costs. Additionally, a borrower can host a “boarder,” basically a tenant, and use the income earned from that person’s residency to cover mortgage costs. Otherwise, a co-applicant can be any person who is “willing and financially able.”

Educational Requirements

All applicants to the HomeReady Mortgage program must complete the online Framework Course. This comprehensive, industry-certified course covers everything from documents needed to apply for a mortgage to how to budget for home repairs. It takes approximately 4 to 6 hours to complete. They also have a network of homeownership advisors to help you through the entire process.

Although it doesn’t meet the HomeReady Mortgage program’s educational requirement, consider seeking out a HUD-approved mortgage counselor for extra information.