Home Affordable Mortgage – HomeReady & Home Possible
The Fannie Mae HomeReady Mortgage Loan and the Freddie Mac Home Possible Mortgage Loan are both programs aimed at helping low to moderate-income borrowers with limited down
While they have similarities, there are some differences between the two.
It’s important to note that specific details may change over time, and it’s advisable to check with Treasury Funds Home Loans, Inc. for the most up-to-date information.
General Differences Explained
Fannie Mae HomeReady Mortgage Loan
HomeReady is designed for borrowers with low to moderate incomes.
It allows for flexibility in income sources, such as non-borrower household income and rental income, to help applicants qualify.
HomeReady requires a minimum down payment of 3%.
The program may have flexible credit score requirements, making it accessible to a broader range of borrowers.
HomeReady mandates that at least one borrower completes an online homebuyer education course to promote informed and responsible homeownership.
Private Mortgage Insurance (PMI) is typically required unless the borrower is eligible for cancellation based on loan-to-value ratio and payment history.
Freddie Mac Home Possible Mortgage Loan
Home Possible is also designed for low to moderate-income borrowers.
It may consider income from non-borrowers, such as family members, to help applicants qualify.
Home Possible requires a minimum down payment of 3%.
Similar to HomeReady, Home Possible may have flexible credit score requirements.
While not mandatory, Home Possible encourages borrowers to complete an education course to enhance their understanding of the home buying process.
Borrowers are required to have mortgage insurance. However, like HomeReady, it may be cancelable under certain conditions.
Both programs are available for eligible properties in California.
Loan limits and eligibility criteria may vary, as do mortgage programs and requirements.
Contact Treasury Funds Home Loans, Inc.
to discuss your particular mortgage loans needs.
*Mortgage Insurance Explained
Mortgage Insurance is a type of insurance that lenders often require borrowers to obtain when they have a conventional mortgage and make a down payment of less than 20% of the home’s purchase price. The primary purpose of mortgage insurance is to protect the lender in case the borrower defaults on the loan. When a borrower makes a down payment of less than 20%, it increases the risk for the lender because there is less equity in the home. Mortgage Insurance provides a level of protection to the lender by covering a portion of the outstanding loan balance if the borrower defaults on the mortgage. The borrower pays a monthly premium for the mortgage insurance coverage. This premium is typically included in the monthly mortgage payment. The cost of mortgage insurance can vary based on factors such as the size of the down payment, credit score, and loan-to-value ratio. It is expressed as a percentage of the original loan amount. It’s important to note that PMI is specific to conventional loans, and government-backed loans like FHA (Federal Housing Administration) loans have their own mortgage insurance requirements. Borrowers should carefully review the terms of their mortgage agreement and understand the conditions under which PMI can be canceled. As the borrower pays down the mortgage and the home’s value increases, they may be able to eliminate the need for PMI over time. Treasury Funds Home Loans, Inc. is here to help you understand mortgage insurance and how it may apply to your mortgage loan.