Low down payment financing with discounted fees for creditworthy low and moderate-income borrowers
PROGRAM INFO AND PURPOSE
Freddie Mac Home Possible mortgages provide lenders with a way to reach rapidly growing markets of first-time homebuyers and low- and moderate-income (LMI) borrowers. Features of Home Possible include low down payments, fixed-rate mortgages, reduced mortgage insurance coverage levels, flexible closing cost funding options, and no cash-out refinancing. Despite offering low down payments, Home Possible mortgages include risk management features to promote responsible lending.
CRITERIA FOR BORROWER
Credit scores as low as 660 for purchase transactions and 680 for no cash-out refinances will be considered. Loans where none of the borrowers has a usable credit score may be manually underwritten if the loan is not a Home Possible Advantage loan or secured by a manufactured home. First-time homebuyers: A borrower with no ownership interest in a residential property in the last three years is considered a first-time homebuyer. A displaced homemaker or single parent whose only ownership interest in the last three years has been a joint ownership in the marital residence is also considered a first-time homebuyer. First-time homebuyers may receive a loan-to-value (LTV) advantage (a maximum of 97 LTV rather than a 95 LTV) by using Home Possible Advantage, a program geared exclusively for firsttime homebuyers, instead of Home Possible.
LIMITS ON INCOME:
The borrowers’ annual income cannot exceed 100 percent of the area median income (AMI) or a higher percentage in designated high-cost areas. No income limits apply if the mortgaged premises are located in an underserved area.
CRITERIA FOR GETTING A LOAN
Down payment sources:
No minimum contribution from personal funds is required for one-unit properties; 3 percent is required for two- to four- unit properties, and 5 percent is required for manufactured homes.
The Home Possible maximum LTV is 95 percent, or up to 105 percent combined loan-to-value ratio (CLTV) with Affordable Seconds, which are subordinate liens for down payment assistance, closing costs, or renovations. Affordable Seconds funds must be provided by a unit of state or local government, housingnance agency, nonpro t organization, regional Federal Home LoanBank under one of its affordable housing programs, or employer.Affordable Seconds with deferred payments for ve years are considered gifts in the automated underwriting system. Secondary nancing of any type, including Affordable Seconds and USDA’s Rural HousingService Leveraged Seconds, is permitted, but only Affordable Seconds allows an LTV to 105.
Homeownership education is required for at least one borrower if all borrowers are rst-time homebuyers.Internet-based homeownership education programs developed by mortgage insurance companies are allowed, such as Freddie Mac’s CreditSmart program. Lenders must provide (at no cost to the bor rower) early delinquency counseling to all borrowers who experience problems meeting their mortgage obligations. For two- to four-unit transactions, at least one borrower must complete a landlord education program.
Limits on Loans:
FHFA publishes Freddie Mac’s conforming loan limitsannually. For 2016, a one-unit property has a loan limit ranging from $417,000 to $625,500 depending on geography. Certain high-cost areas are also taken into consideration (www.fhfa.gov).
5/1, 7/1, or 10/1 ARMs with an original maturity not greater than 30 years are allowed on a one- to two-unit property; 7/1 and 10/1 ARMs are allowed on manufactured homes.ARMs are not allowed when using Home Possible AdvantageSM.
Freddie Mac Home Possible Loan is available in the following areas/cities
Browse for additional mortgage experience in other cities with products and services provided by übermortgage.