In addition to having similar names, Home Ready and Home Possible are two of the most popular low down payment mortgage programs. Both programs offer unique features that improve your ability to qualify for a mortgage. They also share the common goal of making home ownership more achievable for borrowers with lower income and less resources.
One of the unique elements of the Home Ready program is that it allows borrowers to qualify using non-traditional income sources. Borrowers can include income from a non-occupant co-borrower, such as a parent, rental income from boarders and income from a non-borrower household member to help qualify for the loan. The ability to use these additional income sources is a key differentiator compared to other mortgage programs.
The program also permits the use of non-traditional credit profiles for borrowers with a limited credit history or no credit score. If you are a borrower with higher credit score you may have the option of paying a lower mortgage rate and potentially reduced private mortgage insurance (PMI) fees relative to standard loan programs. HomeReady applies more flexible qualification guidelines to enable more borrowers to participate in the program.
The Home Possible program also enables borrowers to incorporate non-traditional income sources in their loan application. Applicants can include rental income from boarders as well as income from the units in a multifamily property that you do not occupy. This feature is especially helpful for multi-generational families where the children may live in one unit of a property and the parents live in another unit.
Another great point to pick the Home Possible program is that borrowers with lower incomes and borrowers that purchase properties in designated low income census tracts may pay a lower mortgage rate.
Both HomeReady and Home Possible programs enable you to purchase a single family home with a 3% down payment and no minimum borrower financial contribution.
Home Possible and Home Ready mortgages are provided by traditional lenders including national, regional and local banks, mortgage brokers and credit unions. In Sean La Rue Home Loans we recommend that you compare the loan terms and eligibility guidelines for both programs to find the mortgage that is right for you.
So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.