Freddie Mac launched the House Possible mortgage program in 2014 to make it easier for borrowers with very low to moderate incomes to purchase a home. Applicants without credit scores are eligible borrowers, and down payments as little as 3% are permitted.
HomeReady is a Fannie Mae program that is generally comparable.
- Freddie Mac offers the Home Possible program to borrowers with low and moderate incomes.
- Low fees, low down payments, and minimal mortgage insurance requirements are all available.
- Borrowers have flexibility in funding their down payments.
In low-income census tracts, there are no income restrictions. In other census tracts, qualified borrowers’ incomes won’t exceed 100% of the median income for that region (AMI).The income cap, however, may sometimes be 80% of AMI.
If the property’s loan-to-value (LTV) ratio is less than 95%, borrowers without credit scores can be eligible for a Home Possible mortgage. The program is open to all potential homebuyers. If more than one borrower applies for the loan, at least one of them must live there as their main home.
Home Possible mortgages are available for a broad range of home types. These consist of buildings with 1-4 residential units, apartments, planned communities, and specific prefabricated homes.
Benefits For Borrowers
Borrowers may get their 3% down payment from a variety of sources in addition to their own money. Among these are Affordable Seconds, employer-assisted homeownership (EAH) programs, donations from family members, money from a government or non-government organization, and cash. In rare circumstances, sweat equity may also be a means of financing the down payment. A Freddie Mac effort called Affordable Seconds helps homeowners with closing expenses and down payments.
If the LTV ratio is less than 80%, mortgage insurance may be canceled; for LTV ratios more than 90%, coverage requirements are lowered. Credit costs are limited and are less than typical fees for loans with an LTV ratio above 80%.
The assessment of a “adverse market” tax on refinancing deals, which is intended to make up for expected losses of $6 billion in 2020 and 2021, has been delayed by Freddie Mac in the meanwhile.
Benefits For Lenders
Across order to increase their market potential and provide lenders access to “borrowers in a broad variety of life phases, from millennials buying their first home to move-up borrowers and retirees contemplating downsizing,” Freddie Mac promotes Home Possible to lenders. Freddie Mac is also able to purchase mortgages from lenders that are part of the Home Possible program.
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