For this last section, we will be going over the Income Guidelines and Eligibility, Credit Guidelines, Residency, and possible Refinance Options!
- 1 Minute | No Hard Credit Check
Income Requirements
For both the Home Possible and Home Possible Advantage programs, the income requirements are very flexible. Not only do these programs both allow “boarder” income, but they also take into account the Area Median Income, also known as AMI. This was created to counter excluding areas that have a much higher cost of living (example: buying a home in San Francisco, California and buying a home in Wilmington, Delaware would not be able to have the same flat income guidelines, as the cost of living in San Francisco is significantly higher) or by alienating those in areas with much lower than average income. Both of these programs are targeting lower-income families to enable them to affordably purchase a home, after all. However this does not exclude borrowers who have higher than Area Median Income.
Area Median Income is estimated by HUD (The Department of Housing and Urban Development). HUD estimates median family income for an area in the current year and adjusts that amount for different family sizes so that family incomes may be expressed as a percentage of the area median income. With this said, these programs do allow borrower’s who would be a bit above the Are Median Income, especially in high cost areas.
Credit Score and How It Affects Each Program
For the Home Possible Program, borrowers without a credit score can still be approved for a home. And even though borrowers can still be approved for these homes, the down payment can still be as low as 5%. Unfortunately, this is not possible at this time with the Home Possible Advantage program.
Both of these programs allow for refinancing, as long as it’s a No Cash-Out Refinance. A “No Cash-Out Refinance” essentially is a refinancing of a home for an amount equal or less than the existing outstanding loan balance. However, this refinance only affects the mortgage term and/or the interest rate. While this program can lower a borrower’s monthly payments, it can also result in an increase in interest paid over the life of the loan.
And finally, the Home Possible and Home Possible Advantage programs has a requirement for the borrowers: All borrowers must occupy the property as their primary residence. The ideal profile for these programs is for first-time home buyers, move-up borrowers and retirees.
Next blog post will be about the in-depths of Fannie Mae’s Home Ready Program!
- 1 Minute | No Hard Credit Check
