Looking to own a home but not sure you can afford or even qualify for a mortgage? You might be surprised by the terms of the HomeReady mortgage program, which is specifically designed for creditworthy low- to moderate-income borrowers, offering expanded eligibility for financing. Note that a credit score of at least 620 is recommended to qualify and further benefits are accessible with a credit score of at least 680. If that sounds like you, here are several ways in which you can benefit from a HomeReady Mortgage.
Low Down Payment
You’re able to finance up to 95-97% loan-to-value (LTV) for the purchase of a single-unit principal residence, which means that if you’re having trouble coming up with a sizable down payment, you’ll be able to get a mortgage with as little as 3 – 5% of the purchase price of a home, plus fees. Additionally, gifts, grants, Community Seconds program funds, and cash-on-hand are all permitted as sources of funds for the down payment and closing costs. And this is not limited to first-time buyers, so you’re still eligible if you’ve purchased a home in the past.
HomeReady Mortgages support HomeStyle Energy, manufactured housing and HomeStyle Renovation type homes. They also support expanded access to credit responsibility through underwriting with rental unit and boarder income and non-occupant borrowers such as a parent. There is also no minimum contribution required from the borrower’s own funds.
Unlike standard requirements for other mortgages, HomeReady offers lower mortgage insurance coverage requirements for loans with LTVs greater than 90%. Insurance is cancellable after the loan balance drops below 80% of the LTV, i.e., after home equity reaches 20% of the purchase value of the home. Both of these features can lower your monthly payment when qualifications are met. For those with a credit score greater than or equal to 680, there are risk-based pricing waivers which offer yet another route to better pricing.
HomeReady can be used to purchase or refinance any single-family home, given a few requirements. First, the borrower’s income must meet the eligibility limit. Properties in low-income neighborhoods have no income limit while all other properties require that the borrower make 100% of the area’s median income. Keep in mind, as mentioned previously, that income requirements can include flexible underwriting options such as a parent or other family member.
Additionally, there is an education requirement which consists of an online Framework course which must be completed by at least one borrower on the HomeReady purchase transaction. This isn’t just a requirement, however, it’s also a benefit to the borrower. It provides an understanding of the full spectrum of home ownership so that borrowers may make a confident, informed purchase with peace of mind knowing what’s ahead in terms of responsibilities and costs. Additionally, working one-on-one with an available counselor can help a borrower pick the right timing, the right house, and the best mortgage for his or her financial situation. If a Community Seconds down payment is involved, borrowers may instead complete their education course or required counseling so long as it is provided by a HUD-approved agency and is completed prior to closing. See this link for more details.
Those with a disability, lack of internet access, or other issues may utilize other available delivery methods of the education requirement by calling Framework’s toll-free customer service line (855-659-2267). This education requirement benefits the borrower by helping ensure sustainable homeownership and a stable financial future with informed decision-making and responsible risk awareness.
Ready to take your first steps toward home ownership or looking to refinance your existing home mortgage? Contact us so that we can help you put your dream of home ownership within reach.