The Freddie Mac Home Possible program provides an affordable homebuying opportunity to low-to-moderate income borrowers. This mortgage program offers highly competitive loan terms, and easier qualification guidelines than other conventional loans.
What is the Freddie Mac Home Possible Program?
The Freddie Mac Home Possible® Program is a homeownership initiative designed to assist individuals and families with low to moderate incomes in achieving their dream of owning a home. This program offers affordable mortgage options with low down payment requirements and flexible eligibility criteria.
By providing access to responsible and sustainable financing solutions, Freddie Mac aims to make homeownership more accessible and affordable for those who may not have otherwise qualified for traditional mortgage programs.
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Home Possible Program Highlights:
- 3% down payment.
- No upfront mortgage insurance.
- Ability to cancel monthly mortgage insurance once the LTV reaches 80% or lower.
- Flexible loan requirements, especially in terms of what income can be used to qualify..
- No minimum reserve requirements for single family residences (1 unit properties).
- Potentially lower interest rates for lower income borrowers.
- Applicants must intend to live in the financed property as their primary residence.
- Only available for first-time homebuyers, repeat buyers, and those looking to refinance.
- The property must meet conventional mortgage standards and be a single-family home or certain qualifying multi-unit properties.
- Co-signers are allowed, but at least one person on the mortgage must occupy the home.
- The mortgage must comply with conforming loan limits and utilize a fixed-rate or adjustable-rate structure.
Home Possible Income Limits
The Home Possible income limit is set within each census tract in each state and county. If your qualifying income is less than 50% of the county median income, then you may qualify for a “very low income loan“. If your qualifying income is between 50%-80% of the county median income, you may qualify for a “low income loan“.
Understanding income limits for Home Possible® program
The income limits set for the Home Possible® program define the maximum amount a household can earn to qualify for the program. These limits are based on the area’s median income (AMI) and vary depending on the location of the property.
Your first step is to visit the Home Ready Eligibility Lookup Tool and put the address of the property that you are interested in the the map’s search bar.
Once you have entered the property address, your results will be displayed and the following Home Possible income limits information will be displayed.
- Property address
- County
- Home Possible income limit
- Median income for the county
- 80% area median income
- 50% area median income
If your income falls within the acceptable range to qualify for the home possible program, then contact us and we will help you to get pre-approved.
Adjustments to income limits for different household sizes
The Home Possible® program takes into account the size of the household when determining income limits. Larger households may have slightly higher income limits compared to smaller households to accommodate the increased financial responsibilities.
It’s important to note that income calculations include the combined income of all individuals living in the household, including co-borrowers, partners, and other dependents.
By considering area median income and household size, the Home Possible® program ensures that assistance is targeted towards those who truly need it, helping them overcome the financial barriers to homeownership.
Home Possible Requirements
You may view the standard requirements for Home Possible below. If you would like to speak with a lender to find out if you qualify for the Home Possible program, click here.
Credit Score – The absolute minimum credit score is a 620. However, most Home Possible mortgage lenders will require a 660 or higher credit score for a single family residence with a fixed rate mortgage. For an adjustable rate mortgage (ARM), the minimum credit score accepted is usually 680. For a multi-family property (2-4 units), you would need a minimum credit score of 700. If you do not meet these minimum credit score requirements, you still may get approved if you have sufficient “compensating factors”, such as savings, conservative use of credit, and/or a long time on your job.
DTI Ratio – Your total monthly payments on debts, including your mortgage payment, and any other credit reported debts (such as credit cards and auto loans), may not exceed 43%. If you have excellent credit, long job history, and/or a decent amount of savings, you may qualify for a higher ratio.
Income Limits – For most areas, your income must not exceed the average median income of the county the property is located. In underserved areas, as well as high cost regions, your income can be as high as 170% of the average median income of the location. To determine the income limits of a particular location, use this eligibility tool on the Freddie Mac website.
Homebuyer Education – If you are a first time home buyer, in order qualify for Home Possible, you must complete a homeownership education class. You can take the course online through Credit Smart. Upon successful completion of the course, you will be provided a certificate of completion, which you can simply print out from your computer and provide to your mortgage lender.
Mortgage Insurance – All Home Possible mortgages must carry mortgage insurance. Fortunately, the mortgage insurance can be cancelled once the LTV reaches 80% or lower (meaning you have 20% or more in equity). You can view the mortgage insurance rates for Freddie Mac loans to see how much your mortgage insurance will cost. The loan representative you speak with can also assist you in calculating your mortgage insurance.
Down Payment – The down payment requirement for Home Possible is 3%. The funds used for the down payment does not need to be sourced, which means it can be borrowed, gifted, or provided through a down payment assistance program.
Occupancy – You must occupy the property that you finance using this program. This means that you can not buy an investment property. If you purchase a multi-unit property, you are allowed to rent out the other units though.
These are the basic guidelines for Home Possible. If you are approved for this program, you will receive a loan approval that lists exactly what will be required for your loan to close.
Click here to see if you qualify for Home Possible
Special Requirements for Multi-Unit Properties:
There are some additional requirements for any 2-4 unit properties. To qualify to purchase a 2-4 unit property, you must put at least 5% down, and 3% of this must come from your own funds (meaning it can not be borrowed, come from a grant, or down payment assistance). You also must have a minimum credit score of 700 to qualify (compared to the minimum credit score requirement of 660 for 1 unit properties). Lastly, it is required that any borrower who wishes to finance a 2-4 unit property complete a landlord education course.
Home Possible Mortgage Lenders
Any Freddie Mac approved lender can issue Home Possible loans. We consider the following mortgage lenders to be the best lenders offering this program:
Please note: We are not affiliated with all mortgage lenders that are featured on our website. We include lenders that we have deemed to offer the best loan terms and customer service. If you would like some assistance being matched with a lender, we can connect you with a Home Possible lender in your location.
Benefits of the Home Possible® program
The Home Possible® program offers several advantages to eligible borrowers:
- Lower mortgage interest rates compared to the general population, with potential additional discounts for high credit scores.
- Subsidized private mortgage insurance, making homeownership more affordable.
- Flexible down payment options with assistance programs and alternative sources of funding.
- Access to educational resources and homeownership classes for first-time buyers.
- Opportunity for low and moderate-income households to overcome barriers to homeownership.
Minimum Credit Score Requirements for Home Possible® Mortgages
When considering a Home Possible® mortgage, it’s important to meet the minimum credit score requirements. For mortgages with a fixed rate, a minimum credit score of 660 is typically required. However, for adjustable rate mortgages and manufactured homes, the minimum credit score is 680. Meeting these credit score requirements is essential to qualify for the Home Possible® program.
Exploring Down Payment Options and Assistance Programs
Home Possible® offers low down payment options to make homeownership more accessible. With this program, eligible borrowers can secure a mortgage with a down payment as low as 3%. Additionally, there are various down payment assistance programs available, including cash gifts, grants, employer assistance programs, and even second mortgages. Exploring these options can help borrowers find the best down payment solution for their specific needs.
Homeownership Education Requirements for First-Time Buyers
First-time homebuyers who qualify for the Home Possible® program may be required to complete homeownership education courses. These courses provide valuable information and insights on the homebuying process, financial management, and mortgage responsibilities. It is important to fulfill these education requirements to gain a comprehensive understanding of homeownership and make informed decisions throughout the process.
Property Eligibility and Types of Homes Covered by Home Possible®
Home Possible® is available for both single-family homes and multi-unit properties, including condominiums and certain prefabricated houses. However, it is important to ensure that the property being financed meets the program’s eligibility criteria. Only primary residences are eligible, and properties intended for rental or investment purposes are not eligible under the Home Possible® program.
The Role of Mortgage Insurance in Home Possible® Loans
Mortgage insurance is an important aspect of Home Possible® loans. This insurance protects the lender in case of borrower default. Under the Home Possible® program, Freddie Mac offers subsidized mortgage insurance, which helps make homeownership more affordable for buyers who qualify. Understanding the role of mortgage insurance is crucial for borrowers considering a Home Possible® mortgage.
Additional Considerations for Borrowers with Low Income
Borrowers with low income may face unique challenges in the homebuying process. However, the Home Possible® program aims to assist individuals in achieving affordable homeownership despite these challenges. It is crucial for borrowers with low income to explore the various resources and assistance programs available to them, such as down payment assistance and flexible credit options. These additional considerations can help make the dream of homeownership a reality for those with limited income.
Achieving Affordable Homeownership with Home Possible®
How Home Possible® can help you buy and own your home
Home Possible® is a program designed to make homeownership more accessible for individuals with low and moderate incomes. This program offers various benefits, including flexible down payment options and subsidized mortgage insurance. With Home Possible®, you can turn your dream of owning a home into a reality.
Understanding down payment and debt-to-income requirements
When it comes to purchasing a home, understanding down payment and debt-to-income requirements is crucial. Home Possible® allows for a low down payment of just 3%, which can help ease the financial burden of buying a house. Additionally, assessing your debt-to-income ratio is essential to determine your ability to manage mortgage payments.
Leveraging employer assistance programs and sweat equity
Home Possible® recognizes the value of employer assistance programs and sweat equity in achieving affordable homeownership. Some employers offer down payment assistance or contribute to closing costs, helping you save money during the home-buying process. Sweat equity involves contributing your labor towards the construction or improvement of your home, which can reduce costs.
Benefits of low down payments and affordable seconds®
One of the notable advantages of Home Possible® is the option for low down payments. This feature enables more individuals to enter the housing market with less upfront investment. Additionally, Home Possible® offers affordable seconds®, meaning you can combine the program with other down payment assistance programs to further support your homeownership journey.
Steps to qualify and apply for a Home Possible® mortgage
Qualifying for a Home Possible® mortgage involves meeting certain criteria, such as credit score requirements and income limitations. Once you determine your eligibility, the next step is to apply for the mortgage. This process typically involves gathering necessary documents, submitting an application, and working with a lender to navigate the mortgage approval process.
Exploring property financing limits and LTV ratios
Understanding property financing limits and loan-to-value (LTV) ratios is essential when considering a Home Possible® mortgage. Lenders set financing limits based on the area and property type, ensuring borrowers are within reasonable boundaries. Additionally, the LTV ratio determines the maximum loan amount you can borrow relative to the appraised value of the property.
The road to affordable homeownership is within reach with the Freddie Mac Home Possible® program. By leveraging the benefits, understanding the requirements, and exploring available resources, you can make your homeownership dreams a reality in 2025 and beyond.
Frequently Asked Questions
What is Home Possible Advantage, and how is it different?
The Home Possible Advantage program is almost identical to the original Home Possible program, but it has a few differences. You can view the similarities and differences between the two on this overview of the two programs. Your loan representative should be able to answer your questions and help you see which of the programs is better suited for you.
What types of properties can you purchase using this program?
The following types of properties are eligible for Home Possible: single family residences (1 unit), duplexes (2 units), triplexes (3 units), fourplexes (4 units), condominiums, and planned unit developments. For Home Possible Advantage, you can only buy 1 unit properties, condominiums, and planned unit developments. You can not purchase a manufactured home.
What if I do not have a credit score?
If you do not have a credit score, you still might be able to qualify for Home Possible.
How does Home Possible compare to the Fannie Mae HomeReady program?
Home Possible is similar to the Fannie Mae HomeReady program. One advantage of HomeReady over Home Possible is being able to use non-borrower income from people that live in your household (such as children, parents, grand parents, or anyone else who lives in your home).
What if I am currently a homeowner, can I qualify for this program?
If you are currently a homeowner, you would need to sell your current home before you are eligible for Home Possible. This program is not exclusively for first time home buyers, but it is only available for primary residences (so no second homes, vacation homes, or investment properties).
Must all borrowers complete the homeownership education course?
No, it is not required that all borrowers take the education course. This is only required of first time home buyers. If you buy a 2-4 unit property, you will need to complete a landlord education course approved by Freddie Mac.
