HomeReady vs Home Possible vs Standard Conventional - program comparison
The 3% Conventional: HomeReady and Home Possible
Two affordable conventional programs - Fannie Mae HomeReady and Freddie Mac Home Possible - offer a low down payment and reduced MI coverage for eligible buyers. Income limits apply (80% AMI at property location). Homebuyer education is required. First-time buyer status is not required.
| Factor | HomeReady (Fannie Mae) | Home Possible (Freddie Mac) | Standard Conventional |
|---|---|---|---|
| Down payment | A low down payment for eligible buyers (per current guidelines) | A low down payment for eligible buyers (per current guidelines) | Varies; typically larger to avoid standard PMI |
| Income limit | At or below 80% AMI at property location (no limit in low-income census tracts) | At or below 80% AMI at property location | No income limit |
| MI coverage requirement | Reduced vs standard conventional at same LTV | Reduced vs standard conventional at same LTV | Standard coverage at same LTV |
| MI cancellation | Cancels at equity threshold per federal law (Homeowners Protection Act) | Cancels at equity threshold per federal law | Cancels at equity threshold per federal law |
| First-time buyer required? | No - repeat buyers eligible | No - repeat buyers eligible | No |
| Homebuyer education | Required (at least one borrower before closing) | Required (at least one borrower before closing) | Not required |
| Income flexibility | Boarder income and non-borrower household income may count (per guidelines) | Non-borrower household income may count in some cases | Standard borrower income only |
Program parameters per current guidelines, subject to change
| Parameter | HomeReady / Home Possible Current Guideline |
|---|---|
| Min down payment (eligible borrowers) | As low as 3% per current Fannie Mae / Freddie Mac guidelines - verify at application |
| Income limit | 80% AMI at property location per HUD AMI data; check at Fannie Mae or Freddie Mac AMI lookup tools |
| MI coverage at 90.01-95% LTV | 25% coverage (HomeReady/Home Possible) vs 30% standard - reduced coverage means lower MI cost |
| Homebuyer education | Framework (Fannie) or equivalent HUD-approved; online, typically 4-6 hours; required before closing |
| AMI exception areas | No income limit for properties in designated low-income census tracts (HomeReady); check property eligibility |
Two separate wins - keep them in separate buckets
Four questions to determine your eligibility
Is your income at or below 80% AMI?
The foundational test. AMI is based on the property location, not where you live now. We check it in the first call.
Can you complete homebuyer education?
Required for at least one borrower. Online, self-paced, typically 4-6 hours. Must be done before closing.
Does your household have non-borrower income?
HomeReady may allow household member income (not on the loan) to count toward qualification. Increases your qualifying power.
Is the property in a no-limit census tract?
HomeReady has no income limit for properties in designated low-income areas. The property address determines eligibility.
Check your AMI and see your numbers - free
We verify your income limit eligibility, compare HomeReady vs Home Possible vs standard conventional, and model your MI picture side by side.
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