HomeReady and HomePossible are essentially conventional products with lower down payments and more flexible guidelines that make it easier to own a home!
Here is the breakdown for Conventional Loans: Credit score: 620 and above but optimal buyers are over 680. DTI: Typically up to 45% but sometimes higher! Learn about DTI and how to calculate it here. Down Payment: 3% minimum Term(s): 30 year fixed Liquid Reserves: Often none required! Mortgage Insurance: Required for LTV higher than 80%. Like standard conventional loans, MI may be dropped from monthly payment once LTV of the propertry drops below 80%. MI is often significantly higher than the PMI on FHA loans for buyers under a 680 FICO. Appraisals: Typically more conservative as compared to HUD appraisals used for FHA/USDA loans. If you have higher than a 720 credit score you may be eligible for a FREE appraisal on a HomePossible loan! Seller Concessions: Up to 3% of the loan amount
A few things to note:
These loan products are very similar but use different approval systems, so you may be approved for one and not the other
Both require homebuyer's education for first time home buyers. $75 for HomeReady and Free for HomePossible
Pricing is usually very similar if not the same
Both products have income limits based on property location. In the State of Michigan, many areas have no income limit for HomePossible loans and is the better one to go with when possible.
Fill out a brief questionnaire and we'll give you a free affordability analysis! We will contact you with the results within 24 hours and help you determine whether you're ready to get pre-approved to purchase a home!