Even as the housing market continues its slow and steady recovery, many potential buyers find that qualifying for a mortgage and saving for a downpayment remain high hurdles to homeownership. The good news is that while lenders are looking more closely at borrowers today than in recent years, there are options for purchasing your home without a 20% down payment.
In fact, creditworthy borrowers with moderate to low incomes will be able to purchase a home with a downpayment as low as 3% through Fannie Mae’s new HomeReady™ mortgage program. HomeReady will expand and replace Fannie Mae’s current affordable lending program, MyCommunityMortgage®, to include both first-time and repeat home buyers. By increasing access to affordable mortgages, more borrowers should be able to purchase homes.
In an effort to increase the types of households that qualify for the mortgage program, more flexible sources of funds can be used for the downpayment and closing costs. For example, income from a non-borrower household member can be considered to determine an appropriate debt-to-income ratio for the loan. This should help multigenerational and extended households qualify for these mortgages.
The new mortgage program also allows income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to supplement the borrower’s qualifying income.
Borrowers will be required to complete an online education course about the buying process and the responsibilities of homeownership. In addition, the program will offer homeowners support through the life of the loan to help ensure sustainable homeownership.
More information about the HomeReady program can be found at www.fanniemae.com/singlefamily/homeready.
For more information on home buying resources in Chattanooga and the surrounding area, contact the Home Builders Association of Greater Chattanooga at firstname.lastname@example.org or visit nahb.org/forconsumers.