HomePossible® 3% Down Payment
- New home must be your primary residence
- Income limits (80% area median income or less)
- Your home must be a 1-4 unit residence
- Your down payment must be at least 3%
- You may not owe money on more than one other mortgaged home
- Credit score of 620 or higher (possibly down to 580)
- You must attend a homeownership education class (Online class OK)
Who Are Home Possible® Mortgages For?
Promoting affordable housing is a big part of Freddie Mac’s mission. That said, this product is targeted at helping a specific segment of the market who could use assistance in home affordability. We’ll touch on what you need to know to qualify.
While this program is specifically funded by Freddie Mac, Fannie Mae’s HomeReady® program is very similar in terms of both qualifications and who it targets. Your lender will be able to help you decide which is right for you.
Low-Wage Earners In order to qualify for this particular loan option, the income of all clients on the loan can’t be more than 80% of the area median income. This is targeted toward helping those with low incomes who can afford a payment to qualify for home affordability based on a low down payment and, in many cases, more modest fees.
First-Time Home Buyers Although you don’t have to be a first-time home buyer to take advantage of this program, it can certainly be a great option for first-time buyers. Because this will come up later, we’ll take a moment to say that both Fannie Mae and Freddie Mac consider a first-time home buyer to be anyone who hasn’t had ownership in a residential property in the 3 years prior to purchase.
Freddie Mac Home Possible® Pros There are several advantages to a Home PossibleⓇ mortgage. Let’s run through them.
Low Down Payment The first major benefit of this loan option is that it only requires a 3% down payment. This is lower than the minimum 3.5% down payment required for FHA loans.
Flexible Down Payment Sources In addition to the second mortgage to fund a down payment, which is unique to this program, you can also receive your down payment from gift funds (including from family members). With a 1-unit primary residence, your entire down payment may come from a gift. This provides additional options for those who need it.
Lower Fees And Credit Scores All major mortgage investors such as Fannie Mae, Freddie Mac, the FHA and the VA have specific fees that are charged based on loan amounts and different risk factors.
With Home PossibleⓇ , the lowest median FICO® Score to qualify is 580. However, if your median credit score is 680 or better, there are no additional pricing adjustments on the loan. If the score is below 680, there’s a maximum price adjustment of 1.5% of the loan amount.
Freddie Mac Home Possible® Cons There are some disadvantages to the Home PossibleⓇ program. Let’s quickly run through what you need to know.
Primary Residence Only This option is only available for primary residences. These are homes you live in the majority of the year. It’s not available for vacation homes or investment properties. The good news is that you can purchase up to 4 units, so you can live in one and rent out the others.
Does Freddie Mac Home Possible® Require Home Buyer Education?
Homeownership education is required when all clients on the loan are first-time home buyers. Clients can get this locally through any homeownership education program that meets the standards of the National Industry Standards for Homeownership Education and Counseling. Alternatively, there are a couple of online homeownership education providers that you can use as well in ReadyNest and CreditSmartⓇ.
Promoting affordable housing is a big part of Freddie Mac’s mission. That said, this product is targeted at helping a specific segment of the market who could use assistance in home affordability. We’ll touch on what you need to know to qualify.
While this program is specifically funded by Freddie Mac, Fannie Mae’s HomeReady® program is very similar in terms of both qualifications and who it targets. Your lender will be able to help you decide which is right for you.
Low-Wage Earners In order to qualify for this particular loan option, the income of all clients on the loan can’t be more than 80% of the area median income. This is targeted toward helping those with low incomes who can afford a payment to qualify for home affordability based on a low down payment and, in many cases, more modest fees.
First-Time Home Buyers Although you don’t have to be a first-time home buyer to take advantage of this program, it can certainly be a great option for first-time buyers. Because this will come up later, we’ll take a moment to say that both Fannie Mae and Freddie Mac consider a first-time home buyer to be anyone who hasn’t had ownership in a residential property in the 3 years prior to purchase.
Freddie Mac Home Possible® Pros There are several advantages to a Home PossibleⓇ mortgage. Let’s run through them.
Low Down Payment The first major benefit of this loan option is that it only requires a 3% down payment. This is lower than the minimum 3.5% down payment required for FHA loans.
Flexible Down Payment Sources In addition to the second mortgage to fund a down payment, which is unique to this program, you can also receive your down payment from gift funds (including from family members). With a 1-unit primary residence, your entire down payment may come from a gift. This provides additional options for those who need it.
Lower Fees And Credit Scores All major mortgage investors such as Fannie Mae, Freddie Mac, the FHA and the VA have specific fees that are charged based on loan amounts and different risk factors.
With Home PossibleⓇ , the lowest median FICO® Score to qualify is 580. However, if your median credit score is 680 or better, there are no additional pricing adjustments on the loan. If the score is below 680, there’s a maximum price adjustment of 1.5% of the loan amount.
Freddie Mac Home Possible® Cons There are some disadvantages to the Home PossibleⓇ program. Let’s quickly run through what you need to know.
Primary Residence Only This option is only available for primary residences. These are homes you live in the majority of the year. It’s not available for vacation homes or investment properties. The good news is that you can purchase up to 4 units, so you can live in one and rent out the others.
Does Freddie Mac Home Possible® Require Home Buyer Education?
Homeownership education is required when all clients on the loan are first-time home buyers. Clients can get this locally through any homeownership education program that meets the standards of the National Industry Standards for Homeownership Education and Counseling. Alternatively, there are a couple of online homeownership education providers that you can use as well in ReadyNest and CreditSmartⓇ.