ATLANTA - If you have been thinking abut jumping on the home buying bandwagon, it’s not too late. Interest rates are at record lows, and even though prices have been rising, the many benefits of owning a home remain compelling.
But many buyers hit a snag when they try to save up the money for a down payment. That’s the part of the purchase price you have to come up with in cash at the closing table.
Most traditional lenders talk about a 20% or a 10% down payment, but with a median salling price of $275,000, that amount of cash is simply beyond reach.
But there is a new loan program that may offer help: It’s called the Fannie Mae HomeReady Program, and it may be just right for you.
Here are the details:
- Targeted toward Low income: This program is designed for individuals earning less than 80% of median income. In most of metro Atlanta, that means you can make up to $65,700 as an individual, or about $100,000 as a couple.
- First-time or repeat homebuyers: Unlike many targeted loan programs, this one is open to repeat buyers as well as first-time buyers.
- Limited cash for down payment: As low as 3% down payment, and cash for the down payment can come from gifts, grants and community loan programs, with no minimum cash requirement required of the purchaser.
- Credit score ≥ 620; borrowers with credit scores ≥ 680 may get even better pricing: Almost any consumer who has a steady income and pays most of their bills on time will have a credit score above 620. And if not, there are programs to help you boost your score over time. The traditional FHA Home loan offers approval on scores as low as 500, but at that level, requires 10% down payment, which can present a problem in itself.
- Roommate or rental income can help: Also unlike most other loan programs, this loan program is designed for a borrower who has a roommate. HomeReady also allows rental income from an efficiency apartment or other accessory dwelling. That rental income can help the borrower qualify in terms of monthly income
- Low cost, removable PMI: As a final benefit, this program offers a much improved PMI program that allows the mortgage insurance to be dropped once you have proved 20% equity. This results in tremendous savings when compared to FHA loans.
The Fannie Mae HomeReady Program is designed for qualified buyers who are having a problem with a down payment, and offers real solutions to many of the needs that we see in today’s lending market.