Accessible Home Financing

Fannie Mae HomeReady® Mortgage

This lending program is designed to make homeownership more accessible and affordable for low to moderate-income borrowers.



  • Down payments as low as 3%
  • Allows multiple sources for down payment, including gifts and grants
  • Fast close – 14 days from contract to keys
  • Can use rental and boarder income to qualify


  • Minimum 3% down payment
  • 80% Area Median Income Limit
  • Minimum credit score of 620
  • Primary Residence Only

What is Fannie Mae’s HomeReady® Mortgage?

The Fannie Mae HomeReady® Mortgage is a lending program designed to make homeownership more accessible and affordable for low to moderate-income borrowers.

Tailored to meet the diverse needs of today’s homebuyers, the HomeReady mortgage stands out with its flexible underwriting guidelines and innovative features. Whether you are a first-time homebuyer, have limited cash for a down payment, or have supplemental income from renting part of your residence, the HomeReady program offers a path to homeownership with advantageous terms, reflecting Fannie Mae’s commitment to fostering sustainable and responsible homeownership.

Understanding Fannie Mae

Fannie Mae, formally known as the Federal National Mortgage Association (FNMA), is a government-sponsored enterprise (GSE) in the United States. Established during the Great Depression, its primary mission is to expand the secondary mortgage market by securitizing mortgages, allowing lenders to reinvest their assets into issuing more loans. Fannie Mae’s role is pivotal in increasing the availability of mortgages for homeowners.

Unlike a mortgage lender, Fannie Mae does not provide loans directly to consumers. Instead, it operates in the secondary mortgage market, ensuring liquidity, stability, and affordability in the housing market by purchasing and guaranteeing mortgages from other lenders.

Who is the Ideal Candidate for a HomeReady Mortgage?

Are you considering a HomeReady® Mortgage but not sure if it’s right for you?

This program is specifically tailored for:

  • Individuals with low-to-moderate income..
  • Both first-time and repeat homebuyers.
  • Those with limited cash for a down payment.
  • Applicants who have supplemental boarder or rental income.
  • People looking to purchase or refinance a property​.


What Makes the HomeReady Mortgage Unique?

What sets the HomeReady Mortgage apart from traditional mortgage options? Here’s what you need to know:

  • Low Down Payment: Offering as low as 3% down payment, it eases the burden for home purchases and allows for higher refinance loan balances.
  • Flexible Funding: The program allows multiple sources for the down payment and closing costs, including gifts, grants, and more, with no minimum personal funds requirement​.
  • Rental Income: It includes rental income as qualifying income, even rent from boarders.
  • Simplified Processes: HomeReady loans can be combined with Community Loans and grants to further reduce a buyer’s cash-to-close.
  • Affordable Mortgage Insurance: Offers reduced Mortgage Insurance premiums. MI cancels once the borrower’s equity reaches 20%​.

Key HomeReady Guidelines

Understanding the HomeReady guidelines is crucial for a successful application. Here are the key points to consider:

  • Income Limits: Your income must not exceed 80% of the area’s median income (AMI) for most areas.
  • Property Eligibility: The property must be a primary residence, but includes all home types: single-family homes, condos, multi-units, and manufactured homes.
  • Credit Score: A minimum credit score of 620 is required, with better terms for higher scores.
  • Mandatory Homeownership Education: For first-time homebuyers, completing a homeownership education course is required.
  • Debt-to-Income Ratio: A favorable debt-to-income ratio is necessary to qualify.
  • Rental Income: Rental or boarder income can be included in your income calculation.
  • Mortgage Insurance: Mortgage insurance is required but can be reduced or cancelled under certain conditions.
  • Refinancing Options: Refinancing is available.

Adhering to these guidelines can greatly enhance your chances of qualifying for a HomeReady loan.

Pros and Cons of the Fannie Mae HomeReady® Mortgage


Low Down Payment

Requires as little as a 3% down payment, even for high-balance loans. This is significantly lower than many conventional loans, and makes homeownership more accessible for many.

Flexible Funding

Accepts various funding sources for down payments and closing costs, including gifts, grants, and community aid, reducing the financial burden on the borrower.

Rental Income Consideration

Includes rental income in the borrower’s income calculation, enhancing loan eligibility and possibly improving the debt-to-income ratio.

Most other loans will not allow for you to use rental income from someone living in your home, or what is typically called “boarder income”. Allowing for this type of income is a unique feature for HomeReady.

Reduced and Cancellable Mortgage Insurance

Features reduced mortgage insurance requirements and allows for cancellation once equity reaches 20%, potentially saving borrowers significant money over the loan’s lifespan.

No Geographic Restrictions on Loan Amounts

Frees borrowers from limitations based on their location, providing greater flexibility and opportunities in different housing markets.

Homeownership Education

For first-time buyers, mandatory education courses ensure borrowers are well-prepared for the responsibilities of homeownership

Lower Interest Rates

 Rates for HomeReady loans are typically lower than any other conventional loan options. There are additional pricing incentives for lenders built into HomeReady loans to encourage lending to low and moderate income borrowers.


Income Limits Based on Area Median Income

The program’s eligibility is tied to the area’s median income, which might restrict higher-income earners from qualifying, and restricts buying power overall.

Property Type Restrictions

While all property types are allowed, a minimum of 5% down is required for 2-4 unit properties.

Mandatory Education Requirement for First-Time Buyers

Requires completion of homeownership education, which could be a hurdle for some first-time borrowers​​.

Primary Residence Requirement

The program is strictly for primary residences, limiting options for those seeking loans for investment properties or vacation homes.

Complex Qualification Criteria

The program’s multifaceted qualification criteria, including the consideration of boarder income and rental income, can be complex to navigate for some applicants.

HomeReady vs HomePossible: Which is Right for You?

Both HomeReady and Freddie Mac’s HomePossible are designed to assist low-to-moderate-income borrowers. While they share similarities, such as low down payments and flexible credit requirements, there are differences. For instance, HomeReady tends to have more lenient guidelines regarding borrower income and rental income inclusion. Understanding these differences can help you decide which program better suits your needs.

How Does HomeReady Compare to FHA Loans?

When comparing HomeReady with FHA loans, some key differences emerge:

  • Both require a low down payment, but HomeReady is slightly lower at 3% compared to FHA’s 3.5%.
  • HomeReady offers the advantage of cancellable mortgage insurance with 3% down, whereas FHA requires 10% down for mortgage insurance to be cancellable.
  • 3-unit and 4-unit properties do not need to pass the “self-sustainability” test wih HomeReady, like they do with FHA. This FHA requirements means that the home must cash-flow in order to be approved. HomeReady mortgage insurance premiums may be lower than FHA’s if a buyer has strong credit scores. But, FHA’s one-size-fits-all mortgage insurance premiums may be lower for buyers with credit challenges.

How to Apply for a Fannie Mae HomeReady Loan

To apply for a HomeReady loan, gather the necessary documents, such as proof of income, rental income records, and information on your current debts. JVM Lending is very experienced in providing Fannie Mae loans and can guide you through the process and ensure you meet all the program requirements.

Contact us today to discuss your homeownership goals or start your JVM loan application online.

Frequently Asked Questions

Is There an Educational Component to HomeReady Mortgages?

Yes. If all occupants are first-time homebuyers, at least one borrower must complete homeownership education. This requirement can be satisfied through Fannie Mae HomeView®​​.

What Are The HomeReady Income Limits?

The HomeReady program has specific income limits, typically set at 80% of the area’s median income (AMI). These limits are updated annually to reflect economic changes. For 2024, the limits have been adjusted to ensure the program remains accessible to those it’s designed to help. Checking the FNMA HomeReady income limits is essential to determine your eligibility.

How Can You Check Your Income Eligibility for HomeReady?

Wondering about your eligibility? Fannie Mae provides an interactive Area Median Income Lookup Tool. This tool allows you to quickly check income eligibility by area or property address. It’s a handy resource to assess your qualifications for the HomeReady program​​.

What Are The Fannie Mae Loan Limits?

Fannie Mae loan limits vary depending on the area’s median income and housing costs. These limits are higher in high-cost areas, ensuring that borrowers in these regions have access to sufficient funding. It’s crucial to check the latest Fannie Mae loan limits for your specific area to understand how much you might be eligible to borrow.

How Does Rental Income Help You Qualify?

One of the unique aspects of the HomeReady program is its inclusion of rental income in the borrower’s total income calculation. This means if you’re receiving income from renting out a portion of your property to boarders, it can enhance your loan eligibility and potentially improve your debt-to-income ratio. This inclusion is a significant advantage for those with additional income sources.

There are several complexities to how this income is considered, but 2 important components are: (1) the boarder must have lived with you for at least 12 months, and (2) the boarder must move in with you to the new location.

One way to think of this rule is that it allows for buyers who have split rent with roommates in the past to continue receiving rent from those roommates in the future, and counts that rent as reliable income. Rent must have been paid from the boarder to the buyer, and may not have been paid directly to a third party (like the landlord).

Take the Next Step with JVM Lending

If you’re considering applying for a Fannie Mae HomeReady® Mortgage, understanding these key aspects can help you make an informed decision. Whether you’re a first-time buyer or looking to refinance, this program offers unique benefits tailored to a wide range of financial situations. Are you ready to take the next step toward homeownership?

Our team at JVM Lending is here to guide you every step of the way. Start your JVM loan application online or contact us today to discuss your homeownership goals and learn more about how Fannie Mae’s HomeReady mortgage could be the key to unlocking your dream home.


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