The first quarter of 2024 brings some good news for homebuyers. Fannie Mae announced that borrowers participating in its HomeReady mortgage program will get an updated benefit.
Starting March 1, borrowers who purchase whole loans under the HomeReady mortgage program will earn a $2,500 credit. This will ease the challenges that make home attainment a distant dream for many.
Homebuyers can save out-of-pocket costs on down payment and closing fees thanks to this new update.
Potential homebuyers keen on availing of this benefit must act quickly. The benefit is only available for loans delivered until February 2025. Fannie Mae verified this in its lender letter dated Jan. 24. This gives qualifying homebuyers roughly a year to find their new home.
There are other requirements that borrowers must fulfill to avail of the credit:
- The $2,500 credit is only available with Fannie Mae’s HomeReady mortgage program. HomeReady is a conventional mortgage loan. It offers low down payment to certain low-income borrowers.
The benefit is available to a category of “very low-income purchase borrowers” or VLIP. It is available to borrowers with a qualifying income of 50% or less than the applicable area median income (AMI) of the purchased property’s location.
- Fannie Mae has an AMI lookup tool to help homebuyers claim this benefit. You can use this tool to check your income eligibility for various property addresses in the country. The lookup tool features a map function. It lets you see if your property meets Fannie Mae’s conforming loan limitations.
- Fannie Mae’s HomeReady mortgage requires a down payment of 3%. You can apply your $2,500 credit toward this minimum down payment. Or you can use the credit to cover closing costs. These include mortgage insurance premiums and escrow fees.
- You must verify your creditworthiness, even if you have a modest income. A FICO credit score of at least 620 or higher is a must. Fannie Mae can help you find a preferred lender who can help you check if you qualify for a mortgage.
- The good news is that the $2,500 credit is available to both first-time and repeat homebuyers. There is a small caveat to this condition. The condition applies if all loan borrowers in the program are first-time home buyers. In this case, Fannie Mae may require at least one to complete a homeownership education course.
To claim the HomeReady mortgage loan and the credit benefit, homeowners must apply through a HomeReady mortgage lender partner. It is advisable to obtain preapproval from a variety of lenders. Doing this will help you compare loan estimates and make an informed decision.
Once the lender confirms your loan eligibility, they will apply the $2,500 credit toward the down payment or closing fees. Fannie Mae will reimburse the lender through loan-level price adjustments.
