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.
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.
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.
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.
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.