Fannie Mae's "New" HomePath: The Home Ready™ Mortgage (2024)

FAQs

Is Fannie Mae HomePath a good deal? ›

Lower costs: The main advantage of a HomePath home is that they're priced to sell quickly. You can usually get into a home for less than you would on the traditional market. Buy before investors: Buyers in search of a primary residence may appreciate the benefit of the First Look™ period.

Yes, home buyers can negotiate prices on Fannie Mae HomePath properties within a small range. A well-negotiated price should indicate why the offered price is lower using nearby, comparable homes.

How do you qualify for a Fannie Mae HomePath property? In order to qualify for a HomePath home with the 3% down payment and matching closing cost assistance, you can't have owned a house within the last 3 years and you're required to use the property within 60 days after closing as your primary residence.

A Fannie Mae HomePath property is real estate obtained by foreclosure or a deed in lieu of foreclosure. Buyers can purchase a HomePath property with a 3% down payment and receive a closing cost credit up to 3% of the purchase price if they use the HomeReady loan program.

Derivatives Helped Cause Their Downfall. According to some estimates, only 17% of their portfolios in 2007 were subprime or Alt-A loans. 2 But then housing prices declined, and homeowners began defaulting. As a result, this relatively small percentage of subprime loans contributed substantially to the losses.

The HomePath program offers several benefits, including a 5% down payment and no mortgage insurance for move-in ready homes for investors or owner occupants. Buyers may purchase a Fannie Mae-owned home with no lender-requested appraisal and flexible terms.

HomePath is a program that allows homebuyers and investors to purchase homes that Fannie Mae has repossessed due to foreclosure, short sale or forfeiture. Fannie Mae is a government-sponsored enterprise that supports the U.S. housing finance system.

Key Takeaways

Fannie Mae HomePath properties are foreclosed properties owned by Fannie Mae. HomePath homes come with a variety of perks, such as lower price points and special financing options. Because the homes are foreclosures, they may need repairs.

Credit: HomeReady allows for nontraditional credit. Credit scores as low as 620 are permitted. This limit is revised annually. For manual underwriting, there is a minimum credit score of 660 for one-unit properties and a credit score minimum of 680 for two- to four- unit properties.

What is Fannie Mae minimum credit score? ›

The minimum representative credit score is 620. Manually underwritten loans: Higher of 620 representative credit score or average median credit score, as applicable, or the minimum representative credit score required by the variance.

In a significant policy change, Fannie Mae has announced that, starting from the weekend after November 18, 2023, it will accept 5% down payments for owner-occupied 2-, 3-, and 4-unit homes.

Borrower Level

Consider an individual a First Time Homebuyer (FTHB) if they: are purchasing the security property, will reside in the security property, and. had no ownership (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property.

Fannie Mae is happy to buy mortgages from lenders — but not every mortgage. For Fannie Mae and Freddie Mac to be able to re-sell loans, they need to be considered safe investments. That means each mortgage must meet certain requirements or “guidelines.” Fannie Mae guidelines run more than 1,200 pages.

Fannie Mae restricts the number of single family residences (i.e. 1-4 unit) properties to a maximum of ten properties owned when purchasing a second home or an investment property; however, some mortgage lenders have overlays that reduce this limit to four financed properties so be sure to ask if your mortgage lender ...

The key comparisons of the loans are that a FHA loan has a lower credit score requirement that is lower to qualify and a 3.5 percent down payment which may be less than a Fannie Mae loan. The Fannie Mae loan has a higher credit score requirement at 620 to 640 which is higher than the FHA loan.

A 20% risk weighting places Fannie Mae MBS in an asset category generally considered to be of very high credit quality.

Because Fannie Mae has a minimum qualifying credit score of 620, this should help more clients qualify together on the loan, allowing for the use of all incomes to determine what they can afford.