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Buying A HomePath Property: Is It Right For You?

May 10, 2024 7-minute read

Author: Carla Ayers

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*As of July 6, 2020, Rocket Mortgage is no longer accepting USDA loan applications.

 If you want to buy a home but can’t afford a mortgage for a standard-market property, choosing a HomePath home might be right for you. In this article, we’ll explain more about the HomePath program and how you can buy a HomePath home. We’ll also introduce you to some of the benefits and drawbacks of buying a foreclosed property.

What Is HomePath?

HomePath is a Fannie Mae program that can help you move into a foreclosed home with financial assistance. You may be able to buy a home with a down payment as low as 3% when you take a conventional mortgage

What Is A Fannie Mae HomePath Property?

HomePath homes are foreclosures owned by Fannie Mae. There‘s a wide range of home types available through HomePath. You may find everything from condominiums to multifamily properties, depending on when you shop.

Fannie Mae sometimes takes control of these properties through a deal called a “deed in lieu.” During a deed in lieu transfer, the homeowner willingly gives up control of the property; this means that the foreclosed homes available through HomePath could be in much better condition than homes that were involuntarily seized.

Other times, Fannie Mae has to take back a property because a homeowner has defaulted on their payments. These homes may be in worse condition because the previous owner doesn’t have the funds or motivation to handle upkeep if they know the home is about to be taken away. These homes may be in significantly worse condition.

In some cases, Fannie Mae might also spend time and money upgrading the home’s interior or appliances. Keep in mind, however, that Fannie Mae sells each home in the HomePath program in “as is” condition. That means you may need to cover any extra repairs after closing.

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HomePath Property Requirements

You don’t need to use a conventional mortgage loan to buy a HomePath property. You may use a USDA loan or a VA loan to buy the property with 0% down if the home you’re interested in is in move-in condition. Rocket Mortgage® doesn’t offer USDA loans at this time. Make sure both you and the home qualify for the loan of your choice before you apply.

You don’t need to be a first-time home buyer to purchase a HomePath home. You can buy the HomePath home as a primary residence, but you can also buy it for use as a vacation home or rental property.

How Does The HomePath Program Work?

You go through a slightly different process than buying a standard-market property when you buy a HomePath home. Here’s a guide to the process:

1. Find A Real Estate Agent

First, you cannot buy a HomePath property without a real estate agent or REALTOR®. Fannie Mae accepts offers from only Fannie-approved listing agents, but a local real estate agent can help you submit an offer through the correct channels. Your agent must submit an offer online and work on your behalf.

Make sure you have a reliable and knowledgeable real estate agent or REALTOR® by your side before you start shopping for properties. Look for a responsive, proactive local agent who knows the local housing market well and has experience and connections in the field.

2. Determine How Much House You Can Afford

You should also have a rough idea of how much of a loan you can get before you shop.

Consider your income, debt-to-income ratio (DTI), housing needs and long-term plans when you work out a budget to help figure out how much home you can afford.

3. Get Preapproved

After you have an idea of how much you can spend on a home, it’s time to get preapproved for a mortgage loan.

A preapproval gives you a more concrete idea of what a lender is willing to give you in a loan. Understanding your financing options also signals to REALTORS® and sellers that you’re serious about buying a house, and makes it easier to view properties and submit offers.

4. Look For HomePath Properties

Next, take a look at the properties available through HomePath by visiting its online database. You can search by price, number of bedrooms, ZIP code and more.

Many of these homes have competitive prices, as Fannie Mae’s goal is to sell the properties quickly. Take a look at what’s available and compare it with your budget. Contact your agent if you see a home that you want to view. They will help you set up a viewing.

Take careful note of the property’s condition during your viewing. Remember that Fannie sells HomePath homes in as is condition, so you’re responsible for any outstanding repairs or updates the home needs. Factor these costs into your budget when you decide how much to offer for the home. Your agent can also help with this step.

5. Get A Home Inspection

Once you find a property you’re interested in, you’ll want to get a home inspection before you submit an offer. An inspection is different from the home appraisal that’s required by most mortgage lenders. During an inspection, an assessor will walk through the property and inspect many of its structural components, including the foundation, roof and systems.

Home inspectors will also advise on the home’s condition and what kind of repairs you’ll likely need. Factor inspection results into your initial offer and make sure you leave yourself with enough money to make the property livable.

6. Make An Offer

Once you decide you’re ready to move forward with the purchase, your agent can submit an offer. They will also help guide you through the negotiation and closing processes.

Benefits Of Buying A HomePath Property

Let’s take a look at some of the benefits of buying a HomePath property:

  • Lower price point: Like many foreclosures, HomePath properties have prices that are below market rate. If you need a bigger home but you can’t afford a standard-market property, a HomePath property might be the solution.

  • Possibly better condition: Homeowners may give up HomePath homes through deed-in-lieu This means that HomePath homes may be in better condition when compared to other foreclosures. Just know that this isn’t always the case.

  • Clear title: When you buy a property from an individual, you might run into title claim issues. Things like back taxes or liens on the property can impede your claim to the home. When you buy a HomePath home or other foreclosure, you don’t need to worry about running into these issues because the bank or investor owns the title.

Drawbacks Of Buying A HomePath Property

Buying a HomePath home or any foreclosure also comes with risks, including:

  • No guarantee of home conditions: Foreclosures, in general, have more damage than standard-market properties and may require significant repairs. Though HomePath properties could be in better condition than other foreclosures, there is still no guarantee that you’re getting a well-maintained home. Someone who has defaulted on their payments may not be motivated or able to keep the home in the best condition.

  • As is condition: Fannie Mae sells HomePath homes as they are, which means that you can’t request repairs or renovations when you submit your offer. You need to factor in the costs of fixing anything that’s broken or needs replacing when you make your initial offer.

  • Non-prime areas: Like many foreclosures, HomePath homes are more likely to be in a non-prime area. Remember this if you see a home with a price that looks too good to be true – you may not want to be in a rush to make an offer.

  • Stiff competition: Though first-time home buyers get dibs on HomePath properties, sales open to real estate investors after a few weeks on the market. These investors often snatch up HomePath properties quickly because of their low prices. You could lose out on the single-family home you’ve had your eye on if you don’t move fast.

Is A HomePath Home Right For You?

So, is buying a HomePath property right for you? The answer depends on your situation.

HomePath homes may be better for younger buyers who want a starter home. HomePath homes can be smaller and more affordable, which can make them an ideal choice for buyers on strict budgets.

A HomePath home might not be right for you if you have a long list of needs for your next home, if you’re looking for a home in a prime area or if you’re not willing to make repairs on your property.

HomePath FAQs

Before deciding if you should go forward with a HomePath property, let’s take a look at some frequently asked questions when it comes to these homes.

How can you find HomePath homes?

Finding HomePath properties is fairly straightforward. You’ll go to the HomePath website and use their search tool. You’ll then be able to see photos, the address, contact the listing agent and schedule a tour.

How do you qualify for a Fannie Mae HomePath property?

There's no requirement that you use a specific loan option to buy one of these homes, so depending on the option you qualified for, you would need a down payment of between 0% – 3.5% for a primary residence. Lenders will also look at your income and assets and pull your credit to see what you can afford.

The Bottom Line: HomePath Could Be The Key To Your First Home

HomePath homes are foreclosures owned by Fannie Mae. HomePath homes are usually more affordable than standard-market homes, but they’re also sold in as-is condition.

You must have a real estate agent or REALTOR® to buy a HomePath home. Buying a foreclosure comes with risks, including no guarantee of the home’s condition.

A HomePath home might be right for you if you’re looking for a smaller starter home or if you’re working on a limited budget. If you’re ready to make the next step toward buying a HomePath property, start your mortgage application online today. You can also give us a call at (833) 326-6018.

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Carla Ayers

Carla is Section Editor for Rocket Homes and is a Realtor® with a background in commercial and residential property management, leasing and arts management. She has a Bachelors in Arts Marketing and Masters in Integrated Marketing & Communications from Eastern Michigan University.