There is a common misconception, by first time home buyers and seasoned homeowners, that a 10% or 20% down payment is needed to purchase a home. There are excellent loan programs available that allow borrowers to obtain a mortgage with as little as 3% down and Fannie Mae guidelines have recently been updated to make home ownership more available and affordable.
FannieMae recently announced changes to income and eligibility criteria for its HomeReady mortgage program which will allow more borrowers to qualify for a mortgage. Features of the new program include:
- income limits have been raised to 100% of area median income which will expand access to credit and make it easier for lenders to determine eligibility
- more flexible loan underwriting
- financing up to 97% loan-to-value for purchase of a residence and up to 95% LTV for limited cash-out refi loans
- borrower is not required to be a first time buyer
- lower mortgage insurance payments
- flexible sources of funds can be used for the down payment and closing costs with no minimum contribution required from the forrower
- more affordable and cancelable monthly PMI (private mortgage insurance, required for any loan with less than 20% down)
Fannie Mae is working to provide education for borrowers, expand access to credit and promote credit responsibility and successful homeownership.
If you’ve been on the fence about buying a home, talk with your Realtor® or lender for more information about the Fannie Mae HomeReady® program.