HomeReady: The perfect loan for today's homebuyer!

Buy a home with only 3%. Learn how.

House with a sold signFannie Mae's HomeReady financing is intended for both first-time and repeat home purchasers. A HomeReady loan may also be used to refinance an existing mortgage.

The HomeReady mortgage just needs a 3% down payment (or equity for a refinance). A 3% down payment on a $100,000 house only costs $3,000! A home buyer is permitted to make a larger down payment if he or she so chooses.

HomeReady Loan Requirements

The HomeReady loan conforms to most, (but not all) of the Fannie Mae conventional lending guidelines. Some of the program's highlights include:

Borrower Eligibility: U.S. citizens, permanent resident aliens.

Non-permanent resident aliens must have a social security number and must be employed in the United States.

Credit Score: Low credit scores (620) may be eligible for HomeReady financing. . Even if you have no credit, you may still utilize the HomeReady program. The program allows the use of non-traditional trade lines to build a credit history, such as utility bills, mobile phone, or internet bills, gym memberships, and most other monthly payment accounts.

Co-borrowers: Borrowers are not required to live in the property. Co-borrowers who will not live in the home require a 5% minimum down payment (95% LTV). Parents, for example, who will not be residing in the house, may be co-borrowers on the loan to assist their children in qualifying for a mortgage and purchasing a home.
Income restrictions may apply. The co-borrower's monthly income and monthly debts are calculated along with the borrower(s) and must be less than 50%.

Debt to income ratio: Lenders use a simple calculation called debt to income to compare the monthly debt payments (including the new mortgage payment) to the borrower's monthly income. The result of the calculation is expressed as a percentage. The debt-to-income ratio (DTI) should not be greater than 50%. In other words, the monthly debt paid each month (car payments, credit cards, school loans, etc.) should not exceed 50% of the borrower's monthly gross income.

Down Payment: No less than 3% of purchase price. No minimum contribution from borrower is required. Payment can be sourced from:

  • Gift funds
  • Community seconds
  • Grants
  • Seasoned cash-on-hand

Homeownership education: The HomeReady program requires homeowner education. On your smartphone, you may complete the Framework online course in 4-6 hours. Regardless of down payment, at least one borrower must take homeownership education if all borrowers are first-time home purchasers.

Income Limits: Fannie Mae imposes income limits on participants in its HomeReady program. To be eligible, your income must not be more than 80% of the median income in your region (AMI).

In other words, if the average annual income in your region is $100,000, you must make $80,000 or less to be eligible for the HomeReady award.  To find out what the average income in your region is, use the Fannie Mae lookup tool.

Loan Limits: The loan amount must not be greater than the conforming limit for the county in which the property is located. Use the Fannie/Freddie drop down control to find the maximum loan limit for your county. The Limit Type should be set to Fannie/Freddie.

Loan Type and Term: May be a fixed-rate or adjustable-rate mortgage with a term not exceeding 30 years

Fixed rate terms:

  • 10-year fixed-rate mortgage
  • 15-year fixed-rate mortgage
  • 20-year fixed-rate mortgage
  • 30-year fixed-rate mortgage

Adjustable rate:

  • 5/1 ARM
  • 7/1 ARM
  • 10/1 ARM

HomeReady mortgage insurance: Applicants with a down payment less than 20% are required to obtain private mortgage insurance. Note: the lender will acquire the mortgage insurance on your behalf.

Property Type/Eligibility: The property must be owned and occupied by the owner.
It is not permitted to be used as an investment property or a second residence.
The following kinds of property are eligible:

  • One to four-unit principal residence (down payments may be higher with multi-unit properties)
  • Cooperative
  • Condominium
  • Planned unit development (PUD)

HomeReady refinance requirements

You may be able to refinance your mortgage into a HomeReady loan, provided your current mortgage is owned by Fannie Mae. A HomeReady refinance loan may help you reduce your monthly mortgage payments and get you a lower interest rate than you had on your initial loan.

Fannie Mae provides a lookup tool to help you determine whether Fannie Mae owns your mortgage.

Cash out is not permitted with the HomeReady refinance mortgage. For those homeowners' who are unfamiliar with the phrase, cash out, the term means obtaining additional money from the refinanced mortgage.


In conclusion, HomeReady is a great loan option for today's homebuyers. It offers competitive interest rates, flexible eligibility requirements, and easy online application. So if you're in the market for a new home, be sure to check out HomeReady.