A Comprehensive Guide to Home Possible for Michigan Homebuyers

In a real estate market where homeownership can sometimes feel impossible, Freddie Mac’s Home Possible program makes buying a home possible (see what they did there?).

In this comprehensive guide, we’ll dive into the details of the Home Possible loan program, exploring its benefits and eligibility criteria to help you make an informed decision about your journey toward buying a home in Michigan.

 

What Is the Home Possible Loan?

The Home Possible program is a Conventional Loan program offered by Freddie Mac, designed to make homeownership more accessible for low to moderate-income borrowers. One of the key features of this program is its low down payment requirement, which can be as low as 3% of the home’s purchase price. This makes it easier for individuals and families with limited savings to buy a home.

Attracting even more homebuyers, the Home Possible Loan offers flexible sources for the down payment, including gifts and grants, making it more achievable for borrowers to come up with the required funds. The program also provides options for reduced private mortgage insurance (PMI) helping to lower monthly payments.

 

Home Possible Guidelines & Qualification Requirements

As with any home purchase through a mortgage program, there are guidelines to adhere to and qualification requirements that must be met. For the Home Possible Loan, borrowers must satisfy the following eligibility requirements:

• 660 credit score
• Income no more than 80% of AMI
• 3% down payment
• DTI of 50% or less
• Property type: Must be owner-occupied, including single family, multi-unit, or a condo

 

What are the Home Possible Income Limits?

Before applying, make sure you do not exceed the Home Possible income limits. Borrowers’ income should be 80% or less of the Area Median Income (AMI) for the location of the home purchase. Since the Home Possible income limits are based on the median income in a specific location, the specific dollar amounts vary depending on your area.

 

What are the Benefits of the Home Possible Mortgage?

The Home Possible program is loaded with benefits that attract homebuyers in Michigan. One of the key advantages is the low down payment requirement, which can be as low as 3% of the home’s purchase price. Buyers also like that the program allows for flexible sources of funds for the down payment, including gifts and grants, further easing the financial burden of buying a home in Michigan. Home Possible also offers flexibility in credit underwriting, making it possible for borrowers with non-traditional credit histories or higher DTIs to qualify.

 

HomeReady vs Home Possible

The HomeReady and Home Possible programs are both initiatives aimed at helping low to moderate-income borrowers achieve homeownership, but they are offered by different government-sponsored entities and therefore have different terms of eligibility criteria and features.

HomeReady is offered by Fannie Mae, while Home Possible is offered by Freddie Mac. One key difference is that HomeReady has a minimum down payment requirement of 3%, similar to Home Possible, but Home Possible may allow for a down payment as low as 3%, whereas HomeReady’s 3% requirement is standard. Another difference is in the income limits: HomeReady’s limits are generally higher than Home Possible’s, allowing more borrowers more room to qualify.

Both programs offer reduced mortgage insurance options and accept a variety of income sources for qualification, making them valuable options for those seeking to purchase a home with limited funds.

 

What Exactly is Freddie Mac?

Freddie Mac, or the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise (GSE) established to promote stability and affordability in the U.S. housing market. Created by Congress in 1970, Freddie Mac operates in the secondary mortgage market, primarily buying mortgages from lenders, packaging them into securities, and selling them to investors. By doing so, Freddie Mac helps provide lenders with funds to make more mortgages, which in turn helps more people achieve homeownership. Freddie Mac plays a crucial role in providing stability and affordability to the mortgage market, especially during times of economic uncertainty. The GSE is also tasked with supporting affordable housing initiatives and works to expand access to homeownership for low to moderate-income families.

 

FAQ’s

Is homebuyer education required with Home Possible?
Yes, homebuyer education is required with the Home Possible loan program. Borrowers must complete an online homeownership education course to qualify for the loan. This requirement is designed to ensure that borrowers are well-informed about the homebuying process and can make informed decisions about their purchase. The course covers topics such as budgeting, understanding credit, the mortgage process, and maintaining the home. Completion of the course is typically a condition of loan approval and must be done before closing on the home.

What is the minimum credit score for Home Possible?
In order to qualify for the Home Possible program, buyers must have a minimum credit score of 660.

Who qualifies for HomeReady?
To qualify for the HomeReady program, borrowers must meet certain income limits, which are based on the location of the property and the number of people in the household. In general, borrowers must have an income that is at or below the AMI to be eligible. Additionally, borrowers must complete a homeownership education course to qualify for the program. HomeReady also offers flexibility in terms of the sources of income that can be used to qualify, allowing for non-borrower household income to be considered.