Many people believe that FHA loan programs are the only low-down-payment loan programs. While the FHA loan program is an excellent one, you don’t have to resign yourself to saving 20% down if the property you are interested in isn’t suitable for an FHA loan.
Fannie Mae and Freddie Mac offer several other excellent programs that you may be interested in. Many allow you to buy properties such as duplexes, four-plexes, or manufactured homes.
Fannie Mae HomeReady
The HomeReady program is designed primarily for low-income buyers with limited cash for a down payment. Down payments may come from sources such as gifts or grants. You may also qualify with rental or boarder income, even if your renter or boarder would be living in an ADU.
- HomeReady requires a 3% down payment.
- You will be required to pay cancellable mortgage insurance until your equity reaches 20%.
- No geographic restrictions.
- If all occupying borrowers are first-time homebuyers, at least one borrower must take homeownership education.
- You may partner with non-occupant buyers, like parents.
You may use the HomeReady program to buy a manufactured home or a traditional home.
Fannie Mae Standard 97
The Fannie Mae Standard 97 option requires at least one borrower to be a first-time homebuyer but offers a low downpayment option with no income limits.
- Requires a down payment of 3%.
- Requires mortgage insurance.
- If all borrowers are first-time homebuyers, at least one borrower must complete homebuyer education.
- Allows borrowers to obtain down payment and closing cost assistance from third-party sources.
This program allows you to purchase a wide variety of home types, including a standard principal residence, a condo, a co-op, a PUD, or standard manufactured housing.
Freddie Mac HomeOne
HomeOne is designed for first-time homebuyers who require flexible financing.
- Requires a down payment of 3%.
- No geographic limits.
- No income limits.
- Allows the borrower to use down payment assistance programs.
- Requires mortgage insurance.
HomeOne allows you to purchase single-family homes, townhouses, or condos.
Freddie Mac Home Possible
The Home Possible program is one of the most flexible low down payment mortgage programs.
- Requires a 3% down payment.
- Down payments can come from multiple sources, including family members, employers, and secondary financing.
- Limited to low-income borrowers.
- Mortgage insurance is required but may be canceled after the borrower achieves 20% equity.
You may use this program to buy 1-4 unit buildings, condos, co-ops, planned unit developments, and certain manufactured homes.
Choosing the Right Program
When so many programs are available, it can be challenging to choose the one that is right for you and your family.
Fortunately, you don’t have to navigate these complexities alone. Alex Doce can help you choose the low down payment home loan program that’s just right for your family and for the property type you wish to purchase.
Alex will give you the resources and support that you need to get approved for a loan. Schedule your one-on-one consultation today.