HomeReady Mortgage – What It Is & How To Apply

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HomeReady Mortgage – One of the best decisions you can make when buying a house is finding the right mortgage to refinance your home.

HomeReady Mortgage - What It Is & How To Apply

However, most mortgage lenders require paying a standard 20% down payment, which might be difficult for some people. But there is a solution.

There is a mortgage available through government-sponsored enterprises, which is known as the HomeReady Mortgage. This mortgage provider requires a down payment, but a less costly one.

The HomeReady mortgage is accessible through a government-sponsored enterprise, such as Fannie Mae. It serves as a specialized loan program created to aid homebuyers in reducing the expenses associated with purchasing a house.

This initiative, established by Fannie Mae (Federal National Mortgage Association), presents an alternative to the Federal Housing Administration loan (FHA). Its primary goal is to support individuals with low to moderate incomes in their pursuit of buying or refinancing a home.

This is achieved by lowering the requirements for mortgage insurance and the standard down payment typically expected in conventional mortgage arrangements.

What Is HomeReady Mortgage?

The HomeReady mortgage, initiated by Fannie Mae, stands out as Fannie Mae’s 3% low-down payment mortgage option. This program is tailored to be an affordable mortgage solution, particularly beneficial for first-time homebuyers with low to moderate incomes.

It facilitates a minimum down payment of 3 percent and concurrently reduces mortgage loan costs and interest rates. Moreover, this mortgage program is open to individuals looking to refinance an existing mortgage.

How Does HomeReady Mortgage Work?

This Fannie Mae mortgage is available for both first-time and repeat homebuyers. However, to qualify, borrowers need a minimum credit score of 620 or above. If your credit score is 680 or higher, you might be eligible for more favorable terms.

Benefits Of HomeReady Mortgage

HomeReady Mortgage is not just affordable; it is a low-down payment mortgage product that is designed for creditworthy low-income borrowers. However, if you are still contemplating whether to choose it or not, here are some of the benefits it offers below:

  • Non-occupant borrowers are permitted.
  • Homebuyers will get a low-down payment of as little as 3% for home purchases.
  • There is a reduced MI coverage requirement for loan-to-value ratios above 90% (up to 97%).
  • Flexible sources of funds with no minimum contribution from borrowers’ funds.
  • Cancellable mortgage insurance.

Also, there are no geographic restrictions on loan amounts.

Who Qualifies For a HomeReady Mortgage?

Before you can qualify for this mortgage, you need to meet certain requirements, which include:

You Must Attend Homeownership Education Costs

To prepare yourself for the financial responsibilities of owning a home, it’s essential to enroll in specific courses. These courses involve participation in various approved programs, aiming to provide you with the necessary information and education crucial for navigating homeownership, especially if you’re a first-time homebuyer.

You Will Need A Qualifying Credit Score

In addition to participating in homeownership education courses, it’s important to maintain a minimum credit score of 620. While some mortgage providers set higher credit score requirements, HomeReady Mortgage stands out by accepting a lower score.

This flexibility ensures you can secure the financing you need, even if your credit score isn’t perfect.

You Must Not Own Any Additional Residences In The Country

One of the criteria for this mortgage is that you must not have an additional residence in the country. Anything contrary to this will disqualify you from this mortgage.

How To Apply For A HomeReady Mortgage

If you think HomeReady Mortgage is the right choice for you, then you should follow this simple application process:

Review And Compare The Mortgage Benefits

The first step to applying for this mortgage is to review and compare the mortgage benefits before you choose a mortgage. Look at the terms and be certain you have reviewed all the benefits of a HomeReady mortgage carefully.

HomeReady Mortgage tends to have a higher interest rate than other conventional loans, and this is because of their lenient down payment policy.

Review The Requirements

Then, you proceed to review the requirements after you have reviewed and compared the loan benefits. Ensure you meet the qualifications before going ahead and applying.

Your credit score requirements, homeownership education courses, and income limits should all be reviewed before applying. Once you are certain that you meet all the requirements, you can go ahead and find a lender.

Find A Mortgage Lender

Then, you’ll need to go through an external lender since direct applications to Fannie Mae aren’t accepted. Fortunately, there are numerous local, national, and online lenders available for you to choose from and work with during the application process.

Apply For a Loan

After selecting a lender, you can move forward with the mortgage application process. Keep in mind that you’ll need to fill out an application and submit additional documents, such as tax copies and income verification, to support your application.

Wait For Your Approval

Following your mortgage application, the lender will thoroughly assess the details and decide whether you qualify for a mortgage before approving.

However, it’s important not to overlook the importance of setting your mortgage rate and determining the approved amount during this process.

Frequently Asked Questions

Where Can I Get HomeReady Homeownership Education And Counselling?

You can get this from Fannie Mae, as they offer free, qualifying homeownership education through their HomeView website.

Do I Need To Make A 20% Down Payment With HomeReady?

No, you don’t need to make a 20% down payment. HomeReady does not require it. You are only expected to put down as little as 3 percent as part of their HomeReady approval.

Can I Apply For A HomeReady Mortgage With Fannie Mae Directly?

You cannot apply directly to Fannie Mae because they are not a mortgage lender. You can only apply for your mortgage with a mortgage lender, and your application will automatically be considered for HomeReady.