HomeReady®

HomeReady® Mortgage by Fannie Mae

A Smarter Way to Buy Your Home with Low Down Payment Options

If you're looking for a low down payment mortgage with flexible guidelines, low interest rates, and discounted PMI, the HomeReady® Loan from Fannie Mae might be a perfect fit. Designed for creditworthy, low- to moderate-income borrowers, this program can help make homeownership more affordable—whether you're a first-time buyer or not.

 
What Is the HomeReady® Loan?

The HomeReady® mortgage is a special type of conventional loan that allows qualified buyers to put down as little as 3%, and still enjoy the benefits of competitive interest rates and reduced mortgage insurance costs. It's backed by Fannie Mae and can be used to purchase or refinance a home.

 
What Types of Properties Are Eligible?

You can use a HomeReady loan to buy or refinance:

• A single-family home
• A condo or townhouse
• A 2- to 4-unit property (must live in one of the units)
• A manufactured home (must meet certain guidelines)

Note: The property must be your primary residence. Vacation homes and investment properties do not qualify.

 
Key Benefits of HomeReady®

Compared to a standard conventional loan, the HomeReady® program offers several standout features:

• Low Down Payment
  HomeReady® allows as little as 3% down (no first time home buyer restriction), while regular conventional loans typically require at least 5% down (unless at least one buyer is a first time home buyer).
• Lower Mortgage Insurance
  Private Mortgage Insurance (PMI) on HomeReady® loans is reduced compared to standard conventional loans.
• Flexible Income Sources
  You can use income from boarders or renters (like roommates) to help you qualify—which isn’t allowed on standard loans.
• Not Just for First-Time Buyers
  While it’s great for first-time homebuyers, you don’t have to be one to qualify.
• Homeownership Education
  At least one borrower must complete a free online homeownership course if all borrowers are first-time buyers.
• Flexible Credit Guidelines
  The minimum credit score required is just 620, and you may qualify with a debt-to-income ratio up to 50% (depending on the situation).

Credit Score & Income Requirements

• Minimum Credit Score: 620.  For borrowers with a 680+ credit score, the FHFA loan level pricing adjustments (LLPA's) are removed. This means that you get the best interest rates and pricing in the industry.
• Debt-to-Income Ratio (DTI): Up to 50% (with strong compensating factors)
• Income Limits: Yes – based on property location
  (Use Fannie Mae’s lookup tool to check: Income Lookup Tool).

Do I Have to Be a First-Time Homebuyer?

No. Anyone can apply for a HomeReady loan—even if you’ve owned a home before. However, if you’re putting less than 20% down, at least one borrower must complete a free homeownership education course (available online).

 
Unique Features to Know

• Positive Rent History: If you've been paying rent on time, that record may help you qualify—especially if your credit is limited.
• Non-Occupant Co-Borrowers Allowed: Parents or relatives can help you qualify even if they won’t live in the home.
• Flexible Sources for Down Payment: You can use gifts, grants, or assistance programs.
• The HomeReady income limits are restricted to the qualifying income used on your loan application, not household income (like USDA). 
  • Example 1: Let's assume the HomeReady income limit is $100,000/year. Your base salary is $90,000/year and you receive bonus, commission, or overtime income that equals $50,000/year. If you can still qualify for the mortgage based on your $90,000/year salary, you would be eligible for the HomeReady loan.
  • Example 2: Let's assume the income limit is $90,000/year.  You earn $87,000/year and your spouse earns $100,000/year. As long as you can qualify for the loan with the $87,000/year income, you can still qualify for the lower interest rates and discounted PMI benefits that the HomeReady loan offers.
     

Is HomeReady Right for You?

The HomeReady loan is ideal if:

• You're buying your first home or haven’t owned in a while
• Your income falls within the local limits
• You have limited savings but strong payment history
• You want a low down payment and lower monthly costs