HomeReady vs Home Possible: Which Should you Choose?

If you don’t have a large down payment for a home, you might think you are out of luck. While the FHA offers a 3.5% down payment loan, Fannie Mae and Freddie Mac also have options. Fannie Mae offers the HomeReady loan https://www.americashpaydayloan.com/pawn-shops-nh and Freddie Mac has the Home Possible loan. While both are similar, they have some differences you should understand in order to make a decision.

Fannie Mae HomeReady Loan

The Fannie Mae HomeReady loan is a conventional loan program. You don’t pay funding fees and you can cancel the PMI after you owe less than 80% of the home’s value. Other things you should know about this loan include:

  • You’ll need to put at least 3% down on the home if it is a multi-unit property
  • You don’t need any money down if it’s a single unit property
  • The income of all adult household members counts as a compensating factor (they don’t have to be on the loan)
  • You can include potential rental income if you purchase a multi-unit property and live in one unit yourself
  • The minimum credit score is 620, but many lenders require at least a 680 score
  • You can’t make more than 80% of the median income for your area
  • You must take the necessary homebuyer courses
  • All borrowers on the loan must occupy the home

Freddie Mac Home Possible Loan

The Freddie Mac Home Possible Loan is another conventional option. With this program, you do not need a down payment; you can borrow 100% of the home’s purchase price. Just like the Fannie Mae product, you must live in the property though.

A major difference with the Home Possible loan is the ability to include all adult household income in the qualifying factors. Freddie mac only considers the income of the borrowers on the loan.