What is Fannie Mae HomePath?

For many first-time buyers, prices in many markets remain out of reach. Fannie Mae’s HomePath program offers an online marketplace of foreclosed homes that may be listed competitively and purchased with a variety of loan types. Eligible first-time buyers who complete Fannie Mae’s education course also may qualify for seller-paid closing cost assistance on certain purchases. Learn more about how HomePath works, who can buy, and how to decide if it fits your goals.

What is the Fannie Mae HomePath Program?

The Fannie Mae HomePath program helps buyers, real estate professionals, and investors find and buy homes owned by Fannie Mae. The homes involved in this program were either foreclosed on, part of a short sale, or forfeited by their owners.

HomePath is open to a wide range of buyers, including first-time home buyers, repeat buyers, and real estate investors.

Certain financial incentives, such as the closing cost assistance offered through the HomePath ReadyBuyer program, are reserved for first-time buyers who plan to use the home as their primary residence.

The program's website allows users to create a free account, search by ZIP code or city, save favorite listings, and set up notifications when new properties become available.

What is a Fannie Mae HomePath property?

Fannie Mae HomePath properties are real estate owned (REO) homes that were either foreclosed on, part of a short sale, or forfeited by their owners.

HomePath properties include single-family homes, multifamily homes, and condos.

HomePath properties were typically previously owned by people who were unable to afford to keep them. That means the homes may be in disrepair.

Fannie Mae may make some repairs or improvements, but HomePath buyers should expect that any property they buy may need repairs.

HomePath eligibility requirements

The HomePath program is open to first-time home buyers, repeat buyers, and real estate investors.

During the First Look period, buyers who plan to live in the home as their primary residence have priority access. The First Look period lasts 30 days in Nevada and 20 days in all other states. If you plan to use the home as your primary residence, you will need to move in within 60 days of closing and maintain your occupancy for at least one year.

To be eligible, you'll need to meet the following requirements:

• Get prequalified or provide proof of funds. A mortgage prequalification letter or proof of funds is required for offer acceptance and should be submitted with your initial offer.
• Work with a licensed real estate agent. Your real estate agent must be registered on HomePath to submit offers on your behalf. Fannie Mae will not accept offers submitted directly by buyers.
• Purchase the home as is. HomePath properties are sold as is. You cannot request repairs or changes before closing, so budget for any work needed after you move in.
• No contingency on the sale of another home. The sale or closing of another home is not an acceptable contingency.
• Sign an Owner Occupant Certification (owner-occupants only). Owner-occupant purchasers are required to sign an Owner-Occupant Certification as a rider to the Real Estate Purchase Addendum.
• Complete the ReadyBuyer education course (first-time buyers only). First-time home buyers who take Fannie Mae's HomeView course and receive a certificate of completion may receive up to 3% in closing cost assistance when purchasing a HomePath property. The first-time home buyers class must be completed before submitting your offer.

How to buy a HomePath property

If buying a HomePath property is right for you, follow these steps.

1. Determine how much house you can afford

The first step for home buyers is to determine how much house you can afford. Start by examining your monthly budget – look at your total expenses and what you are currently spending on housing. From there, decide whether you want to keep a similar payment or if your finances allow for more.

When building out your budget, make sure to account for costs beyond just your mortgage payment. General homeownership expenses such as maintenance, homeowners insurance, property taxes, and any homeowners association fees can add up quickly. Your utility costs may also change, especially if you are moving into a larger home or transitioning from a rental where the landlord covered utilities.

Not sure where to start? Use the affordability calculator from Rocket Mortgage to get a quick estimate of how much home you can comfortably afford based on your income and expenses.

2. Get mortgage preapproval

Next, you’ll want to apply for mortgage preapproval with several lenders. The lender will review your finances and credit to estimate how much you can expect to qualify for. This helps you understand how much house you can afford, and shows agents and sellers you’re ready to buy a home.

If you’re an investor planning to buy a house with cash, you can skip this step because you won’t be using financing for the purchase.

3. Find a real estate agent

Real estate agents can help you through the process of finding and buying a home. It is important to find an agent who is registered on HomePath and has experience with the program. You can search for experienced buyer's agents in your area through platforms like Redfin, which lets you filter agents by location and read reviews from previous clients.

4. Search for HomePath properties

You can find HomePath properties with Fannie Mae’s online database. You can search for homes by location, price, and size. Your agent can help filter your results to find a home that fits your budget and needs. Your agent also may be able to help you estimate repair costs.

5. Complete the buyer education course

Fannie Mae's HomePath ReadyBuyer program is a closing-cost assistance program designed for first-time home buyers. After completing Fannie Mae's online HomeView education course and receiving a certificate of completion, eligible buyers can receive up to 3% of the home's purchase price back in closing cost assistance. The course must be completed before submitting an offer.

6. Get a home inspection

Before you submit your offer, it’s important to hire an experienced home inspector to examine a home. The home inspection will evaluate the home's condition and alert you to any minor or major issues that affect its value or safety.

Buyers usually inspect a home after making an offer, but with a HomePath property, you’ll want an inspection before making an offer. HomePath homes are sold as is, so you'll want to factor in estimated repair costs when making your offer.

7. Make an offer

Finally, it’s time to make an offer. Work with your real estate agent to determine how much to offer and put together an offer letter. The offer letter will include any terms you want to negotiate and any closing cost assistance you'd like to request.

If the offer is approved, you’ll move to the closing process, where you pay for the home and assume legal ownership.

Benefits of buying a HomePath property

The HomePath program offers several advantages:

• Low down payment options. If you finance your HomePath purchase with a HomeReady mortgage, you may qualify for a minimum down payment of 3%.^{1, 2} This makes it easier to get into a home without having to save a large sum upfront.
• Flexible loan options. You can finance a HomePath property with a variety of loan types, including conventional loans, VA loans³, and USDA loans. Keep in mind that if you use a VA or USDA loan, you will not be eligible for Fannie Mae's closing cost assistance program. Currently, Rocket Mortgage does not offer USDA loans.
• Closing cost assistance for first-time buyers. First-time buyers who complete Fannie Mae's online HomeView education course can receive up to 3% of the home's purchase price in closing cost assistance. The course must be completed before submitting your offer, and the request for assistance must be made at the time of your initial offer.
• Potentially lower purchase prices. Because HomePath homes went through foreclosure, they are often listed below what comparable homes in the same area are selling for. This can mean a lower purchase price, a smaller loan amount, and less interest paid over the life of your mortgage.
• Less chance of title title problems than other foreclosure purchases. Since Fannie Mae has already completed the foreclosure process, it owns each HomePath property outright. This means liens, unpaid taxes, and other title issues that commonly affect auction-style foreclosure purchases have already been resolved. That said, buyers should still purchase title insurance as a precaution.

Drawbacks of buying a HomePath property

HomePath properties aren't right for everyone, so it's important to keep their drawbacks in mind when deciding whether to buy one.

• Homes are sold as-is. Homes are sold in their current condition with no guarantee of their state of repair. You may purchase a home that needs significant work, and Fannie Mae will not make any repairs before or after closing.
• You cannot request repairs from the seller. Because HomePath properties are sold as-is, you cannot negotiate repairs or credits for repairs as part of your offer. Any issues found during your inspection will be your responsibility to address after closing.
• Limited inventory. HomePath properties are only Fannie Mae-owned foreclosures, not every foreclosure on the market. Depending on where you want to live, there may be few or no properties available in your target area.
• Owner-occupants get first access. During the First Look period, only owner-occupants, nonprofits, and public entities can submit offers. Real estate investors must wait until the First Look period expires.

Is a HomePath home right for you?

If you’re not afraid of a fixer-upper, a HomePath home might be a good fit.

For example, first-time buyers who need to find a cheap house, don’t have significant savings to pay for closing costs, and have experience with home repairs are good candidates for buying a HomePath property. They have a good chance of finding a low-cost home and can handle any maintenance issues that arise.

FAQ

Here are answers to common questions about HomePath properties.

What does HomePath financing look like?

Fannie Mae aims to make financing for HomePath homes affordable. These mortgages have low down payment requirements, and you can qualify for closing cost assistance. Keep in mind that you may need to pay for private mortgage insurance (PMI). Don’t forget to look for state and local home buyer programs, which often offer assistance that can give you further help with affording a home.

Do you apply for HomePath directly through Fannie Mae?

No. Fannie Mae does not lend money directly to you. You will apply for your mortgage through a private lender of your choice, such as a bank, credit union, or mortgage company. Your lender will handle your prequalification and loan approval. Once you are prequalified, you can search for properties and submit offers through HomePath.com. Think of Fannie Mae as the seller of the home and your lender as the one financing it.

How can you find HomePath homes?

Fannie Mae’s HomePath website offers a search tool you can use to find eligible properties. You can filter listings by location or by details such as size or number of bedrooms. The site also lets you view listing photos, schedule tours, and contact agents.

The bottom line: HomePath could be the key to your first home

If you’re struggling to come up with the money to afford a home and aren’t afraid of putting a bit of elbow grease into a property, the HomePath program could help. It offers as-is properties at lower-than-market prices with valuable closing cost assistance for low-income buyers.

If you are ready to buy a home, you can explore your borrowing options today with Rocket Mortgage.

¹ Client will receive a 1 point (1.000) loan level price adjustment (LLPA) credit on HomeReady and Home Possible purchase loans locked on or after January 2, 2024. One point (1.000) is equal to 1% of the loan amount. Minimum credit amount will be $2,000. Maximum loan amount is $350,000. Offer is not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans already in process; offer is not transferable. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply. This is not a commitment to lend.

² The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

³ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.