Gone are the days when borrowers with low income and not-so-perfect credit didn’t have options for purchasing a home. Both Fannie Mae and Freddie Mac, the two major agencies that buy and sell mortgages from lenders, created mortgage programs designed for low-income borrowers who may not have a large down payment saved up, but have favorable credit scores. Here’s a look at both programs – HomeReady and Home Possible.
If you are having trouble qualifying for a loan due to income, but your credit report shows you are financially responsible, this program may be a good fit. It requires a minimum of 3% down payment and a minimum credit score of 620. Mortgage insurance, or PMI is required until you reach an 80% LTV ratio.
Is the HomeReady Program Right for You?
- Are a first-time or repeat buyer
- Have limited cash for a down payment – but at least 3%
- Earn a salary less than or equal to 80% of the area median income
- Have supplemental income from a tenant
Similar to the HomeReady program, Home Possible may be the right fit if you do not qualify for traditional financing but have decent credit. It requires a minimum 3% down payment and a minimum credit score of 660. If you don’t have a credit history, you may still qualify with an increased down payment of 5%. PMI is required until you reach an 80% LTV ratio.
Is the Home Possible Program Right for You?
- Have limited cash for a down payment
- Have a credit score of 660 or higher
- Are repeat homebuyers or first-timers
- Have an annual income less than or equal to 80% local area median income
- Are looking for flexibility in eligible down payment sources
With minimum down payments and flexible credit requirements, both programs make homeownership possible for borrowers with low incomes.
Ready to Learn More?
Luxury Mortgage offers both the HomeReady and Home Possible mortgage programs. Let us help you start your homeownership journey! Connect with one of our licensed mortgage consultants today to see if one of these programs may be the right fit for you.
Call us today: (888) 379-0303
Four Landmark Sq. Suite 300
Stamford, CT 06901