Freddie Mac Home Possible Mortgage Guidelines
This article is on Freddie Mac Home Possible Mortgage Guidelines. Freddie Mac Home Possible Mortgage UPDATED on July 6th, 2023, by Paulyn Balagot, an associate contributing editor at Gustan Cho Associates. Gustan Cho Associates, empowered by NEXA Mortgage, LLC, is a mortgage broker licensed in 48 states with over 210 wholesale mortgage lenders. John Strange, a senior loan officer at Gustan Cho Associates, explains about Freddie Mac Home Possible Mortgage Guidelines:
Most of the wholesale lenders in our network have no overlays on government and conventional loans. We offer various loan programs, including Freddie Mac home possible mortgage loans.
Freddie Mac announced updates to the Freddie Mac Home Possible Mortgage Guidelines on April 3rd, 2019. This blog will detail those changes and when they go into effect. We do our best to keep our readers informed of any program changes. In the following paragraphs, we will cover Freddie Mac Home Possible Mortgage Guidelines.
Freddie Mac Home Possible Mortgage Loan Program Defined
What is Freddie Mac home possible mortgage? Freddie Mac Home Possible is a loan program to offer a low down payment option to qualify borrowers. It is an alternative to FHA financing. Loan officers love this program for their clients! They have the ability to use Lender Paid Mortgage Insurance to lower the overall mortgage payment.
Please check out this video from Freddie Mac;
Features of Freddie Mac Home Possible Mortgage
What are some features of the home possible mortgage product? The main feature of this product is it only requires a 3% down payment for a single-family home! 3% is even lower than the FHA 3.5% requirement! You may use the home possible loan product to purchase a 1 to 4-unit property, condo, or planned unit development (PUD).
With certain restrictions, you may also purchase a manufactured home. Above and beyond only needing a 3% down payment, the down payment may come from various sources, including gifts from family members, employer assistance programs, secondary financing, and even sweat equity.
Interest rates and fees – Freddie Mace Home Possible Mortgage home product does offer potential borrowers lower fees. Credit fees are capped and less than standard fees for all loans over 80% loan to value. Interest rates associated with these loan products are typically lower than your standard conventional mortgage. This offers clients a great opportunity to save over the life of the loan.
Freddie Mac Home Possible Mortgage Options And Terms
Mortgage flexibility options: The home possible mortgage may be used with a 15, 20, 25, or 30-year fixed rate mortgage. There are also adjustable-rate mortgages available. (ARMs) 5/1, 5/5, 7/1, and 10/1 ARMs allowed
Refinance options: Many of our clients do not know you may utilize this Freddie Mac product to refinance your property. This rate and term option will be for borrowers who occupy the property. Cash-Out refinances are not available with this product.
Income Limits – Unlike FHA, the home possible program DOES have income limits. There are certain areas where income limits do not exist, usually in low-income areas from census data. Luckily, Freddie Mac has made it easy to check the income limits for a specific property. Use their lookup tool, HOME POSSIBLE INCOME LIMIT LOOKUP. This will provide the exact date for the entire United States.
Freddie Mac Home Possible Mortgage Guidelines on Credit Scores
Borrowers without credit scores reporting are eligible: Just like FHA, qualified borrowers without credit scores are eligible for the home possible product. The same 3% down payment requirement applies. Borrowers without credit scores must utilize non-traditional credit. For more information, please see our NON-TRADITIONAL CREDIT BLOG.
Freddie Mac Home Possible Mortgage On Non-Occupant Co-Borrowers
Non-occupying co-borrower hours are allowed, which is similar to an FHA loan. Utilizing the home possible product, a non-occupying home borrower can contribute to the borrower’s funds for the down payment and closing costs.
Mortgage Insurance Guidelines
MORTGAGE INSURANCE: The words mortgage insurance are in capital letters. This is one of the biggest advantages of utilizing this loan program. Unlike FHA mortgage insurance, when putting down 3.5%, mortgage insurance never goes away. Mortgage insurance can be canceled loan balance drops to 80% of the home’s appraised value.
Since this is a conventional mortgage, once you have a 20% equity position in your home, your mortgage insurance goes away. This alone will save you thousands of dollars over the loan life compared to an FHA mortgage.
When putting down 3.5%, an FHA mortgage insurance covers the entire loan life. The only way to cancel that mortgage insurance is to complete a refinance into a conventional loan, which does cost you money. Your interest rate may even go up depending on the market. Freddie Mac released a short clip to review this feature in more detail.
Changes In Freddie Mac Home Possible Mortgage Guidelines
Old Freddie Mac Home Possible Mortgage Guidelines: A borrower may qualify for the home-ready product even if they own ONE additional financed residential property. They may still utilize this program even if they own another home with a mortgage. Remember, to utilize this program, you do not need to be a first-time homebuyer.
New UPDATED Freddie Mac Home Possible Mortgage Guidelines:
The new rule was announced on April 3rd, 2019. It will go into effect on July 3rd, 2019. With the advice from the FEDERAL HOUSING FINANCE AGENCY, occupying borrowers may now have an ownership interest in more than TWO financed properties, including the subject property.. This will allow more Americans to utilize the home possible program.
While this change may not be dramatic, it is a step in the right direction. At Gustan Cho Associates, we offer clients as many loan products as possible. We do not have any LENDER OVERLAYS on FHA, VA, or Conventional mortgages.
We offer a full slate of NON-QM mortgages and DOWN PAYMENT ASSISTANCE programs. Even if another lender has turned you down, we encourage you to contact us. We are available seven days a week, in the morning or evening. Please contact Mike Gracz at (800) 900-8569 or text us for a faster response. Or email us at gcho@gustancho.com for more information.
