Effective July 29, 2018, Fannie Mac is revising income limit requirements for Home Possible Mortgages to better focus on serving low-income and moderate-income borrowers. Freddie Mac is also rolling out a new conventional 3% down payment option for qualified first-time homebuyers with no geographic or income restrictions called HomeOne Mortgage.
Homeownership is a huge part of the American dream. If you work hard enough, if you pay your bills on time, and you do your job, then you can own a home. Unfortunately, many Americans feel that this is a dream that they cannot achieve, sometimes because their income does not come from ordinary sources. They feel that, financially speaking, they can’t qualify for a mortgage to purchase a home. That’s what makes the Home Possible Mortgage program so important.
What is a Home Possible Mortgage?
Home Possible Mortgages are loans that are available to people who want to purchase a home but have limited funds for a down payment, or income from alternative sources. If your income is at or below the median income level in your area, or you’re purchasing a home in an underserved area, a Home Possible Mortgage may be a good option for you.
This program is offered through Freddie Mac, a government-sponsored agency that develops mortgage programs and provides capital to lenders. However, like other government home loan programs, borrowers work directly with a lender rather than Freddie Mac.
Pros of a Home Possible Mortgage
There are many benefits available to borrowers interested in securing a Home Possible Mortgage. Here are some of the most important benefits:
- Low Down Payment: A Home Possible Mortgage comes with a down payment as low as 3%.
- Lower Mortgage Rate: For qualified borrowers in designated areas, securing a lower mortgage rate is possible with a Home Possible Mortgage. With a lower mortgage rate, you save a significant amount of money on interest throughout the life of the loan.
- Ability to Use Alternate Income Sources: When you apply for a conventional mortgage, borrowers qualify with ordinary income. However, with a Home Possible Mortgage, borrowers can include money they earn from alternative sources like renting out a home or a bedroom.
- No Up-Front Mortgage Insurance: Unlike other government programs, the Home Possible program does not require borrowers to pay an up-front mortgage insurance fee. This can potentially save borrowers thousands of dollars.
- Higher Income Limit: While it depends on the area in which you live, borrowers may be subject to an income limit. However, the limit is generally higher with the Home Possible program than many other mortgage programs.
Is a Home Possible Mortgage Right for You?
If you’ve always dreamed of owning a home and have difficulty qualifying for a conventional mortgage, possibly because your income is generated from alternate sources, a Home Possible Mortgage might be the solution.
To find out more about qualifying for a Home Possible Mortgage, visit Freddie Mac’s Home Possible page.
Marimark Mortgage serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.