“Understanding Freddie Mac’s Home Possible® Loan: A Path to Affordable Homeownership”

**Title: Unlocking Homeownership: A Comprehensive Guide to Freddie Mac’s Home Possible® Loan**

**Introduction**

If you have a low income but can afford a monthly mortgage payment and a minimal down payment upfront, Freddie Mac’s Home Possible® loan may be a good option for you. The Home Possible program only requires a 3% down payment and has more flexible borrower requirements than other mortgage options.

In this article, we’ll explore what the Home Possible mortgage program is and how to qualify. We’ll also cover some cost-saving options from O1ne Mortgage Inc., the pros and cons of the Home Possible program, and discuss some alternative loan options.

**What Is The Freddie Mac Home Possible Program?**

Freddie Mac’s Home Possible program allows first-time and repeat home buyers with low to moderate incomes to qualify for a mortgage loan. The program offers several benefits to make homeownership more attainable.

Freddie Mac is a government-sponsored enterprise (GSE) under the Federal Housing Finance Agency (FHFA). Established by Congress in 1970 and taken over by the FHFA in 2008 during the U.S. housing crisis, Freddie Mac offers several loan programs – including Home Possible – that make housing more affordable for low- and moderate-income borrowers.

The Home Possible program was created in 2014. Some notable features include a low down payment requirement and cancellable mortgage insurance, as well as less stringent credit score, debt-to-income ratio (DTI), and loan-to-value ratio (LTV) requirements compared to other loan types.

**Home Possible Borrower Requirements**

To take out a Home Possible mortgage, you’ll need to meet a few borrower qualifications:

– **Down Payment:** Requires a 3% down payment. Eligible sources include funds from checking and savings accounts, gifts, and grants.
– **Credit Score:** A minimum credit score of 620 is required.
– **Income Limit:** Your total annual income cannot exceed 80% of your area’s median income (AMI). Use Freddie Mac’s income lookup tool to find the income limit in your area.
– **Loan-to-Value Ratio (LTV):** The LTV ranges from 80% – 105%. Consult with your lender to determine eligibility.
– **Debt-to-Income Ratio (DTI):** Aim for a DTI equal to or less than 50%.
– **Property Type:** Only owner-occupied primary residences are eligible. This includes single-family homes, multi-unit properties, condominiums, co-ops, and manufactured homes.
– **Mortgage Insurance:** Required annually, but cancellable once the loan amount drops below 80% of the home’s appraised value.

First-time home buyers must participate in a home buyer education program. Options include local programs or online resources like ReadyNest and CreditSmart®.

**Who Are Home Possible Mortgages For?**

Freddie Mac’s mission includes promoting affordable housing, targeting specific market segments needing assistance in home affordability. While this program is funded by Freddie Mac, Fannie Mae’s HomeReady® program is similar in terms of qualifications and target audience.

**Low-Wage Earners**

The income of all borrowers used to qualify cannot exceed 80% of the area’s median income, designed to help those with low incomes who can afford their mortgage payments.

**First-Time Home Buyers**

Although not limited to first-time home buyers, the Home Possible program is a great option for them. Freddie Mac considers anyone who hasn’t owned a residential property in the 3 years prior to the new home purchase as a first-time home buyer.

**Freddie Mac Home Possible Pros**

– **Low Down Payment:** Only requires a 3% down payment, lower than the 3.5% required for FHA loans.
– **Special Offers Available:** O1ne Mortgage offers special deals like the Welcome Home RateBreak, a 2-1 temporary buydown offer, and loan level price adjustment (LLPA) credits.
– **Low Loan-To-Value Ratio (LTV):** Finance up to 105% of your home’s value through the Affordable Seconds® secondary financing program.
– **Flexible Down Payment Sources:** Down payments can come from gift funds, grants, sweat equity, and more.
– **Manual Underwriting Available:** Helpful for some borrowers, though not offered by O1ne Mortgage at this time.
– **Lower Fees And Lenient Credit Requirements:** Minimum credit score of 620, with no additional pricing adjustments for scores of 680 or better.

**Freddie Mac Home Possible Cons**

– **Small Mortgage Lending Network:** Not all lenders offer Home Possible loans.
– **Small Borrower Pool:** Income limits and other requirements reduce the potential pool of borrowers.
– **Primary Residence Only:** Only available for primary residences, not vacation homes or investment properties.

**Alternative Government Loan Programs**

– **FHA Loans:** Insured by the Federal Housing Administration, requiring a minimum 3.5% down payment for credit scores of 580 or higher.
– **USDA Loans:** Backed by the U.S. Department of Agriculture, designed for low-income borrowers in rural areas, with no down payment required.
– **VA Loans:** Available for eligible veterans and active-duty personnel, with no down payment requirement and no private mortgage insurance.

**Freddie Mac Programs For Low-Cost Refinances**

Freddie Mac and Fannie Mae offer new refinance programs for low-income borrowers with higher DTIs, called Refi Possible? and RefiNow™, respectively. Requirements include:

– The loan must be owned by Fannie Mae or Freddie Mac.
– Income cannot exceed 80% of the area’s median income.
– DTI must be 65% or less.
– Must be current on your mortgage.
– The property must be a one-unit primary residence.
– The loan must be more than a year old but no more than 10 years old.
– Can only be used to lower your rate and/or make a term change.

**Conclusion**

Freddie Mac’s Home Possible program helps low-income borrowers secure a mortgage and become homeowners at a lower cost. Fannie Mae’s HomeReady program is nearly identical. To qualify, you’ll need to make no more than 80% of the area’s median income. Similar programs are available for refinancing with a lower income and higher DTI ratio.

Home Possible® and HomeReady® borrowers can save money during the first couple of years of the loan term with a temporary buy down from O1ne Mortgage. Alternatively, you can receive an upfront grant toward down payment and/or closing costs. If you’re ready to explore your loan options, apply online today at [O1ne Mortgage Inc.](https://o1nemortgage.com) or call us at 888-372-8820.

**Keywords:** Freddie Mac Home Possible, low-income mortgage, affordable housing, low down payment mortgage, O1ne Mortgage Inc., mortgage options, first-time home buyers, home buyer education, mortgage insurance, refinance programs, government loan programs.