Tag Archive for: HomePossible

April 7, 2021
PR blog homes in sun

 

First-time homebuyers have unique access to mortgage programs that can save you a lot of money and help you become a homeowner faster. So if you’re getting ready to buy your first home, congratulations! Keep reading to learn how it works and find out if you’re eligible.

Related: Find out if you qualify as a first-time homebuyer

2021 Mortgage Benefits for First-Time Homebuyers

  • Down payments as low as 0% – 3.5% down
  • Fewer income restrictions
  • More flexible credit score requirements
  • Use of gift funds to help with closing costs
  • HUD-issued grants and down payment assistance
  • Government-backed loans with lower interest rates
  • Access to withdraw IRA funds without a penalty
  • Tax deductions for points and origination fees

Top 5 Most Popular Home Loans for First-Time Homebuyers

One of the biggest obstacles for many first-time homebuyers is the down payment.

The good news is you don’t need to put 20% down to get a competitive rate on your mortgage.

In high-cost areas, the average home could be around $750k, requiring a 20% down payment of $150k. Even if you have the funds available, is it still a smart move to invest the full amount into your home? High-income buyers might want to invest that money elsewhere. And for lower-income buyers, a large down payment might not be possible.

The following mortgages are a popular option for first-time homebuyers. Why? They can help lower your down payment and get you into a house without making you cash-poor or depleting your assets.

1. FHA Loan – 3.5% Down Payment

FHA (Federal Housing Administration) home loans are government-backed mortgages. This mortgage is a popular mortgage option for first-time homebuyers because borrowers can qualify with a lower credit score and a low down payment.

  • 3.5% down payment with a credit score of 580
  • 10% down payment with a credit score of 500
  • Flexible income requirements
  • Mortgage insurance premium (MIP) is required

2. VA Home Loan – 0% Down Payment

If you’re a member of the military, the VA home loan is one of the best home loan options for first-time homebuyers. The VA home loan is available to active-duty service members, veterans, and military spouses.

  • 0% down payment required
  • Low mortgage rates
  • Lower credit score requirements
  • Reduced closing costs
  • No mortgage insurance requirements

3. USDA Home Loan – 0% Down Payment

Government-backed USDA home loans offer solid advantages for first-time homebuyers who want to buy a home in a rural area. USDA home loans offer low-interest rates and no-money-down mortgages for qualified borrowers.

  • 0% down payment
  • A government-based mortgage with low-interest rates
  • Benefits to lower-income buyers
  • Lower mortgage insurance premiums

Check out the USDA eligibility map and find out which areas qualify.

4. Conventional 97 Mortgage – 3.0% Down Payment

The conventional 97 mortgage program is ideal for higher-income buyers with excellent credit that want a low 3% down payment. It’s more flexible, and you can keep your assets invested elsewhere.

  • 3% down payment
  • Opportunity to cancel PMI (private mortgage insurance) without refinancing
  • 620 credit score minimum
  • No limitations on areas or neighborhoods
  • No income limitations

5. HomeReady by Fannie Mae and HomePossible by Freddie Mac – 3% Down Payment

HomeReady and HomePossible are perfect for first-time homebuyers who want a conventional home loan with a low rate and a low down payment.

  • 3% down payment
  • Use gift funds for up to 100% of your down payment (HomePossible)
  • Use gift funds for your closing costs
  • Down Payment Assistance (DPA) is available for closing costs
  • You might be able to count rental income on your loan application
  • You can count income from relatives or other people living with you (HomeReady)

The Fannie Mae HomeReady home loan is also a great loan for borrowers who plan to buy a multi-unit property (up to 4 units). One of the units must be your primary residence.

Additional Resources

To find out more information about downpayment assistance for 2021, along with housing grants and vouchers, check out this site for local and state-based programs.

Taking Action

Connect with a local mortgage advisor to see if you qualify as a first-time homebuyer. Start the process early and ask your lender to show you which home loan programs will give you the best advantages. We’d love to help.

 

March 28, 2021
mortgage blog, low down payment, preferred rate

First things first, you might be surprised to learn who qualifies as a first-time homebuyer. Even more surprising, 3% down-payment mortgage options are available for homebuyers who aren’t first-time homebuyers. There are a few limitations, so let’s see which options might be a good fit.

-> Read this short article to find out if you’re eligible as a first-time homebuyer.

Low Down Payment Mortgage Options for First-Time Homebuyers and Repeat Homebuyers

Did you know there are down payment options that require as little as zero percent down on your next home? Find out more about USDA Loans and VA Loans and how you could qualify for a no-down-payment mortgage.

If you’re looking for low-down-payment mortgage options, keep reading.

How to Qualify for 3% Down on Your Next Mortgage in 2021

You’ve probably heard that most new home loans require a down payment between 5%-20% to get a good mortgage. The higher the down payment, the lower the mortgage rate. But this isn’t always the case.

Low-down payment mortgage options only require 3% down and are designed to help more people become homeowners.

A quick list of qualifiers for a 3% down payment option on your next mortgage:

  • A minimum credit score of at least 620
  • Stable employment and regular income
  • No recent foreclosures or bankruptcies
  • Primary residence (live at your new home full-time)
  • Gift funds can be used for the down payment and closing costs
  • Your mortgage must meet conforming loan limits
  • 2021 Conforming limits: $548k in most areas, $822k in high-cost areas

Low Down Payment Mortgage Option #1: HomeReady Mortgage Loan by Fannie Mae

The Fannie Mae HomeReady Mortgage is a mortgage program designed to meet the specific needs of lower-income homebuyers. The income limit set by Fannie Mae is 80% of an area’s local median income. So if you’re shopping for a home in an area where your income is below 80% of that area’s median income, this is a great mortgage option.

The Fannie Mae Home Ready Mortgage has some great benefits to consider for your home loan mortgage.

One of the biggest advantages of the HomeReady Mortgage is the ability to count multiple sources of income toward your loan application. For example, you can include income from renters or relatives living with you when applying for a Fannie Mae Home Ready home loan.

A few benefits and highlights:

  • Gifted funds can be used for up to 100% of your down payment
  • Gifted funds can be used for your closing costs
  • Down Payment Assistance (DPA) can be used for closing costs
  • You can count rental income on your loan application
  • You can count income from relatives or other people living with you (if they’ve lived with you for at least one year).

The Fannie Mae HomeReady home loan can also be used to buy a multi-unit property (up to 4 units) as long as at least one of the units is your primary residence.

Low Down Payment Mortgage Option #2: HomePossible Mortgage by Freddie Mac

The Freddie Mac HomePossible Mortgage is similar to the Fannie Mae HomeReady mortgage program and can help lower-income homebuyers qualify for a home loan. The income limit set by Freddie Mac is 80% of the area’s local median income.

One key difference with the Freddie Mac HomePossible loan is that you’re only allowed to count your own income and rental income on your home loan application. The HomePossible mortgage does not include income from other relatives or occupants as qualifying income (unless they are renters).

A few benefits and highlights:

  • Gifted funds can be used for up to 100% of your down payment
  • Gifted funds can be used for your closing costs
  • Down Payment Assistance (DPA) can be used for closing costs
  • You can count rental income on your loan application

The Freddie Mac Home Possible home loan can also be used to buy a multi-unit property (up to 4 units) as long as at least one of the units is your primary residence.

Low Down Payment Mortgage Option #3: Conventional 97 Mortgage Option for Higher-Income Buyers

The conventional 97 mortgage program is a great option for buyers who have higher income and higher credit ratings but want to qualify for a 3% down payment.

It’s more flexible in some ways since there are no income restrictions, but it has tighter restrictions in other areas. For example, the Conventional 97 mortgage is not available for investment properties or multi-unit properties.

A few benefits and highlights:

  • Keep growing your savings instead of making a big down payment
  • Invest elsewhere to build wealth instead of making a big down payment
  • Ability to cancel PMI (private mortgage insurance) faster
  • Ability to purchase a more expensive home
  • No limitations on areas or neighborhoods
  • No limitations or caps on income

Taking Action

If you’re looking for a 3% down payment mortgage option, there are a wide variety of loan options. Working with an experienced mortgage broker who understands your situation will make a big difference! If you want to save money on your next mortgage and start building equity in real estate, 2021 is a great time to start. We can help.