Creditworthy borrowers with moderate to low incomes will be able to purchase a home with a down payment as low as 3% through Fannie Mae’s newly announced HomeReady™ mortgage program. Aimed at helping borrowers access an affordable, sustainable mortgage, HomeReady replaces Fannie Mae’s MyCommunityMortgage®, and can be used by both first-time and repeat home buyers.
To facilitate its use, HomeReady mortgage guidelines will be integrated into Fannie Mae’s Desktop Underwriter system, which will automatically identify loans that may be eligible for the program.
Among other innovations, income from a non-borrower household member can be considered to determine an appropriate debt-to-income ratio for the loan, helping multi-generational and extended households qualify.
Fannie Mae’s research indicates that extended households tend to have incomes that are as stable or more stable than other households at similar income levels, positioning them well for homeownership.
Other HomeReady flexibilities include allowing income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to augment the borrower’s qualifying income. Borrowers will also be required to complete an online education course about the buying process and homeownership.
Fannie Mae will provide additional details to lenders in the coming weeks through a Selling Guide announcement. HomeReady guidelines are expected to be included in Desktop Underwriter in late 2015. Fannie Mae anticipates accepting loan deliveries under the HomeReady guidelines in late 2015 as well.
Later this year, Fannie Mae will provide online tools to help lenders determine specific income guidelines for HomeReady in their areas.
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