Homeownership can be out of reach for potential buyers with low-to-modest incomes. In the past, traditional advice was for renters and potential buyers to save enough to make a 20% down payment in order to get more favorable lending terms. However, for people living with lower incomes, meeting only basic food, shelter, childcare, medical, and clothing needs is a struggle. This can leave little left over to save each month toward the purchase of a home. In addition, these families are now left dealing with record-high inflation, soaring food prices, and higher rent costs.
Dean Pilcher, Senior Vice President and Area Sales Manager with First Bank Mortgage, said, “A skyrocketing housing market coupled with rising down payments, have made it even more difficult for potential home buyers with modest means to simply save enough. In an effort to help make homeownership more readily available to low-to-moderate income buyers. First Bank Mortgage is proud to introduce a mortgage program option now offered by Fannie Mae, called HomeReady® Mortgage.”
Fannie Mae established HomeReady® Mortgage to make homeownership more affordable and attainable for a broader, credit-worthy audience.
Let’s a take a look at a down payment example: According to a recent survey, the average home price in the U.S. is now estimated to be around $250,000. The average down payment for future home owners of a home of similar value is now hovering around $10,000 - $15,000 with a 30-year conventional home mortgage. If a qualified home owner is eligible to take advantage of the HomeReady® Mortgage program, that down payment requirement could be reduced to approximately $7,500. In addition, private mortgage insurance (PMI) would automatically fall off the home buyer’s monthly payment once the loan balance drops below 78 percent loan-to-value.
To read more about buying a home, check out: Financial Considerations Before Purchasing Your First Home.
Pilcher commented that this program is exciting because it offers clients a conventional loan with features such as down payment options that are as low as 3%. “With a HomeReady® Mortgage, potential buyers may take advantage of lower down payments in addition to affordable, and even cancellable, mortgage insurance. It’s really an ideal loan option for low-income buyers or even those families with multi-generational, working household members.”
Why should a potential homebuyer consider a HomeReady® Mortgage?
▪ Low down payment options
▪ Rental income can be factored into loan approvalˡ
▪ Ability to count additional sources of income toward mortgage qualification
▪ 100% of the down payment can come from down payment assistance
▪ PMI is cancellable once the loan balance criteria is met
What are some of the requirements of a HomeReady® Mortgage?
▪ Income limit is 80% of area median income (AMI)²
▪ Reliable income and employment
▪ Minimum credit score of 620
▪ At least one of the borrowers in a household must complete a homeownership education course³
To find out more about the HomeReady® Mortgage program, reach out to First Bank Mortgage.
First Bank Mortgage offers first-time homebuyer loans where you can take advantage of potential down payment and/or closing cost assistance. Click to learn more about First Bank Mortgage’s mortgage loan options.
ˡ Renter must live with primary borrower for at least one year.
² Including low-income census tracts.
³ Educational course must be from a qualified provider.
In the St. Louis, MO area, reach out to:
Dean Pilcher, Area Sales Manager
First Bank Mortgage
p: (314) 205-3105
e: [email protected]