Low Down-Payment Financing Options: Comparing Home Possible and HomeReady

Joe & Marni Costa and The Park Place Collective Group are here to help you navigate your home financing options. If you're considering a conventional loan with a low down payment, two excellent programs are Home Possible by Freddie Mac and HomeReady by Fannie Mae. While both options have similar guidelines, there are a few differences to consider. Here's a side-by-side comparison to help you determine which program may be the best fit for your needs.

FeatureHome PossibleHomeReady
Income Eligibility	Up to 80% of the Average Median Income (AMI)	Up to 80% of the Average Median Income (AMI)
Minimum Credit Score	620 or Higher	620 or Higher
First-Time Homebuyer Requirement	Not Required	Not Required
Maximum Loan-to-Value (LTV)	97% for Conforming / 95% for Super Conforming	97% for Conforming / 95% for Super Conforming
Non-Occupant Co-Borrowers	Eligible	Eligible
Down Payment Source	Gifts, Grants, Down Payment Assistance (DPA)	Gifts, Grants, Down Payment Assistance (DPA) + Funds from Non-Owner Occupant Co-Borrower
Secondary Financing	Up to 97% LTV if Subordinate Lien is not a Community Seconds Loan	Up to 97% LTV if Subordinate Lien is not a Community Seconds Loan
Community Seconds Financing	Combined Loan-to-Value (CLTV) up to 105%	Combined Loan-to-Value (CLTV) up to 105%
Flexible Income Sources	Broader Income Sources Accepted	Accepts Rental Income from Accessory Dwelling Units (ADUs)
Mortgage Insurance Coverage	80.01%-85% LTV: 12% Coverage85.01%-95% LTV: 25% Coverage	80.01%-85% LTV: 12% Coverage85.01%-95% LTV: 25% Coverage

Key Takeaways:

• Both Home Possible and HomeReady offer flexible financing options with as little as 3% down.
• Income Eligibility is capped at 80% AMI for both programs, making them ideal for moderate-income borrowers.
• Gift Funds and Down Payment Assistance are permitted under both programs, but HomeReady has the added advantage of accepting funds from non-owner occupant co-borrowers.
• Accessory Dwelling Unit (ADU) Income can be used with HomeReady, providing additional flexibility for those with rentable space.
• If using a Community Seconds Loan, both options allow a CLTV up to 105%.

Which Option Is Right for You?

• If you have a non-owner occupant co-borrower contributing to your down payment, HomeReady may be the best fit.
• If you have broader or unconventional income sources, Home Possible offers more flexibility.
• Both programs are excellent for borrowers with a 620+ credit score who are seeking low down payment financing.

Need personalized guidance? Contact Joe & Marni Costa and The Park Place Collective Group today to explore your financing options and find the best loan program for your needs!

402 West Broadway, Suite 400

San Diego, CA 92101

619-990-7552

info@parkplacecollective.com