What Are the HomeReady Loan's Income Limits?

Written by Bill MacDonaldSeptember 14th, 20222 minute read

The Federal National Mortgage Association, known as Fannie Mae, offers a 3% down payment mortgage program for qualified home buyers. There are NO first-time homebuyer requirements!

Highlights include:

  • Buyers are not required to bring any of their own funds to the closing.
  • HomeReady mortgage rates are often lower than traditional mortgage rates.
  • HomeReady accepts non-traditional credit. Credit scores as low as 620 are acceptable.
  • The HomeReady financing program typically offers low interest rates.

Prospective home buyers are permitted to obtain the required 3% down payment and other closing costs as a cash gift or grant from an eligible donor (e.g., a parent, relative, spouse, partner, etc.). The money does not need to be yours.

The income restriction for the loan program is dependent on the county-area income where the house is situated. The size of a family is not considered to establish income eligibility.

However, borrowers of any income level in low-income census tracts worldwide, as well as designated disaster regions, such as places devastated by floods, storms, or wildfire, may utilize the program.

Public employees (firefighters, police officers, health care professionals, teachers, and so on) and military personnel may be eligible for specific flexibilities, such as the utilization of overtime and part-time income.

Debt-to-income ratio

Income from a non-borrower household member may be considered for a debt-to-income (DTI) ratio up to 50 percent. HomeReady allows non-occupant borrowers, such as a parent. Debt to income is a simple calculation that evaluates the amount of income and monthly bills.

Because HomeReady is designed especially for low-to-moderate income families, the loan program waives many of the loan costs that are often associated with “standard” conventional home loans.

Private mortgage insurance (PMI) is required for down payments less than 20%, however the monthly cost is reduced.

The program is offered as an adjustable-rate mortgage (ARM) or a fixed-rate mortgage (FRM), with maturities ranging from 30 to 20 years, 15 to 15 years, and 10 years.

Multi-unit houses are allowed if the borrower plans to live in one of the home's units (i.e. main residence). HomeReady cannot be utilized to purchase an investment property.

Loan application is made through approved Fannie Mae lenders. Most banks and mortgage brokers offer the HomeReady loan program.

Frequently Asked Questions the About HomeReady Mortgage Program

Can you refinance into a HomeReady loan?
Yes, you can refinance your current mortgage into a HomeReady loan.

Do you have to be a first-time home buyer for HomeReady?
There are no first-time home buyer requirements.

Does Fannie Mae HomeReady have income limits?
The total annual qualifying income may not exceed 80% of the area median income for the property's location.

Is HomeReady a conventional loan?
The HomeReady loan is considered a conventional loan, since it parallels conventional loan guidelines and meets Fannie Mae loan requirements.

What is the minimum credit score for HomeReady?
The minimum credit score is 620.