Home Possible: Another Option for Home Ownership
By: Selene Garcia
In an effort to offer easy-to-understand mortgage programs, Guaranteed Rate offers Freddie Mac’s Home Possible program which aims to offer homeownership opportunities for families living in underserved areas or those who earn equal or less than their community’s average income.
If you are looking for a mortgage, but an FHA loan isn’t an option, the Home Possible mortgage might be a better fit for your financial situation. The program offers flexible lending options for a wide array of potential and current homeowners who either want to purchase their first home or move into a larger home.
Understand that not all lenders will offer this program and some may restrict elements of the program.
Qualified Homeowners Under the Home Possible Program
Home Possible was created with the following types of consumers in mind:
- Consumers who wish to purchase a primary residence.
- First time homebuyers.
- Move-up buyers. These are home owners who would like to purchase a larger home for their growing family.
- Consumers who earn equal or less than the local average income.
- Consumers in underserved areas.
- Recent immigrants to the U.S.
Additionally, in order to take advantage of the Home Possible mortgage you must not own (jointly or otherwise) any additional real estate.
Qualified Homes Under Home Possible
Home Possible allows purchase any of the following types of properties, provided you plan to live in the home:
- Single Family Home
- Multi-Family Home (2-4 units)
- Planned Unit Developments (PUD)
- Manufactured Homes (Restrictions apply, as not all lenders will lend on manufactured homes.)
Mortgage Loan Programs Under Home Possible
While Home Possible will allow for many different loan programs, there are restrictions for each property type. Available Home Possible loan programs include:
- 30 Year Fixed- Available for all approved Home Possible homes.
- Adjustable Rates- ARMs are available for single family homes, condo units and multi-family units with a limit of 2 units. The available adjustable rate programs include 5, 7 and 10 years.
- Second Mortgages- While Home Possible allows for second mortgages, restrictions do apply and you should discuss available options with your mortgage professional before exploring this choice.
Minimum Down Payment
Home Possible requires a minimum of 5 percent down for any property type.
While mortgage insurance is required, Freddie Mac has reduced the amount of required mortgage insurance coverage, which will reduce your monthly mortgage insurance payment. Speak with your mortgage professional for more details as coverage rules may vary.
Income limitations are based on local household income averages, and will vary from state to state (and county to county within states), so it’s best to search for your county’s income limits and confirm eligibility.
Home Buyer Counseling
The Home Possible mortgage program requires consumers to complete home buyer counseling prior to closing, to ensure buyers are educated on their mortgage terms and payments. Requirements for home buyer counseling include:
- Counseling with certification is required before you close your loan. If there are two or more first time homebuyers purchasing together, at least one of the buyers must complete home buyer counseling.
- Home buyer counseling must not be provided by any party involved in the sale or financing of the home. If counseling is offered by your lender, counseling must be conducted by someone who is not directly involved in any part of the approval or processing of your loan – this includes your mortgage professional.
- Counseling must meet the standards of the National Industry for Homeownership Education and Counseling.
When deciding to use the type of mortgage which best suits you, it’s best you speak with a seasoned mortgage professional and discuss all of your available options.
For more consumer-friendly mortgage education resources, visit Guaranteed Rate often.
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This article is intended for educational purposes only and should not be interpreted as a recommendation. The information in this article is not an indication of program availability. Always consult with a mortgage professional before making a decision on a home loan.