Wondering how to buy a house with a Home Possible loan? It’s easier than you think! With generous qualification guidelines and low down payment options, Freddie Mac’s Home Possible Mortgage Program has made it easy to buy a house with low income. To make things even easier, we’ve assembled all the information you need into one helpful guide!
What is Freddie Mac?
Freddie Mac is a government-sponsored enterprise (GSE) that is designed to make sure Americans have access to the credit they need to purchase homes. It is essentially the same sort of program as Fannie Mae, except that Freddie Mac buys mortgages from smaller banks.
What is the Home Possible Program?
The Home Possible program offers two types of mortgages to low and moderate income buyers. These two programs are known as “Home Possible” and “Home Possible Advantage.” Both of these programs offer low down payment requirements, flexible down payment sources, mortgage insurance cancellation options and other benefits.
Why should I consider a Home Possible loan?
There are many benefits to using an HomeReady loan to purchase your home.
Down payments are far lower than conventional loans. With Home Possible, you’ll pay 5 percent. With Home Possible Advantage, you’ll pay just 3 percent. Unlike other loans that require you to make a minimum contribution from your personal savings, both Home Possible programs allow you to get help with your down payment from grants, gifts from relatives, employer-assistance programs and secondary financing sources.
Credit requirements are flexible. In fact, Freddie Mac has an official process for borrowers who don’t have a credit score at all. I did not find a minimum credit score listed on the official Freddie Mac website.
Home types are very flexible. You can use a Home Possible loan to purchase homes with 1-4 units, condos and planned-unit developments. You can also use it to buy a manufactured home under certain circumstances.
Mortgage insurance is required but can be cancelled when you have at least 20 percent equity in your home. This means that your payment amount will be reduced after you’ve paid a certain amount toward your principal balance.
Who qualifies for Home Possible loans?
The requirements for this program are not entirely clear on the Freddie Mac website. However, you do not have to be a first-time home buyer to qualify for this program!
Income must be equal to or less than 100 percent of the area median income (AMI) for your area. There are no income limits when purchasing a property in a low income designated area. You can check the income limits for your area here.
If you need to include income from someone who is not going to live in your household, you cannot use this loan program. However, Fannie Mae’s HomeReady program may work for you.
Other requirements may apply.
How do I get a Home Possible loan?
In order to get a Home Possible loan, you must take a homebuyers education course. These courses are available online for a fee but you can usually find a local on-site class for free. These classes are offered by real estate professionals and lenders.
You will also need to find a Freddie Mac approved lender to help you apply for your mortgage loan. Please be aware that lenders are allowed to implement stricter requirements so it’s always smart to shop around for a lender.