HomeReady® Mortgage: How To Apply For This Loan

Finding the right mortgage to finance your home is one of the most important decisions you’ll have to make when buying a house. For those unable to commit to the standard 20% down payment, there are two notable mortgages available through government-sponsored enterprises Fannie Mae and Freddie Mac that make lower down payments possible: HomeReady and Home Possible^®.

In this article, we’ll walk you through the benefits of a HomeReady loan, explore the requirements and explain all the steps you’ll need to complete to apply for this type of mortgage.

What Is Fannie Mae’s HomeReady Program?

A Fannie Mae HomeReady mortgage is a loan program that helps home buyers save on the cost of buying a house. This program offers adjustable underwriting guidelines with some flexibility around the loan terms depending on your situation. Some flexibility it permits is for borrowers to only need a 3% – 5% down payment or pay less on their closing costs.

Fannie Mae created HomeReady to provide an alternative to a Federal Housing Administration (FHA) loan. You should know that it’s similar to Freddie Mac's Home Possible program, but the two aren't the same.

HomeReady Vs. Home Possible

HomeReady and Home Possible are both great mortgage options geared toward lower-income, lower-credit score borrowers looking to build wealth through homeownership. Let’s briefly discuss the main differences between the two loan programs through Fannie Mae and Freddie Mac.

Fannie Mae HomeReady

HomeReady mortgages are home loans financed through the Federal National Mortgage Association (Fannie Mae). A HomeReady loan helps borrowers with low to moderate income buy or refinance a home by reducing the standard down payment and mortgage insurance requirements.

Freddie Mac Home Possible

The Home Possible mortgage program is backed by the Federal Home Loan Mortgage Corporation (Freddie Mac) and helps to finance low- to moderate-income home buyers with similar benefits as the HomeReady program.

Cost Assistance From Rocket Mortgage^®

It’s no secret that home prices have been elevated the last several years and rates have also pushed upward. It can be a challenging environment for home buyers. We understand this and want to offer you a helping hand along your home buying journey. Those who qualify for HomeReady have a couple of options available to them: 

Welcome Home RateBreak is a lender-funded 2-1 temporary buydown of your interest rate.¹ For the first year of your term, the interest rate is 2% less than the regular rate associated with your loan. During the second year, your loan is 1% below the note rate before adjusting to the permanent rate in the third year.

Here’s what that looks like for a 30-year term with a $250,000 loan amount at a note rate of 7%.

If you would rather have help with upfront costs associated with the loan, you can opt for a loan-level price adjustment (LLPA) credit of 1% of the loan amount up to $3,500. If the loan is below $200,000, the credit will be $2,000. If you make up to 50% of the median income where you’re looking to buy, the maximum grant is $2,500.