Park Place Collective
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Comparing Home Possible and HomeReady: Low Down-Payment Financing Options

Joe & Marni Costa and The Park Place Collective Group are here to help you navigate your home financing options. If you're considering a conventional loan with a low down payment, two excellent programs are Home Possible by Freddie Mac and HomeReady by Fannie Mae. While both options have similar guidelines, there are a few differences to consider. Here's a side-by-side comparison to help you determine which program may be the best fit for your needs.

Comparing Home Possible and HomeReady: Low Down-Payment Financing Options

Written by Joe & Marni Costa and The Park Place Collective Group

Joe & Marni Costa and The Park Place Collective Group are here to help you navigate your home financing options. If you're considering a conventional loan with a low down payment, two excellent programs are Home Possible by Freddie Mac and HomeReady by Fannie Mae. While both options have similar guidelines, there are a few differences to consider. Here's a side-by-side comparison to help you determine which program may be the best fit for your needs.

FeatureHome PossibleHomeReady
Income EligibilityUp to 80% of the Average Median Income (AMI)Up to 80% of the Average Median Income (AMI)
Minimum Credit Score620 or Higher620 or Higher
First-Time Homebuyer RequirementNot RequiredNot Required
Maximum Loan-to-Value (LTV)97% for Conforming / 95% for Super Conforming97% for Conforming / 95% for Super Conforming
Non-Occupant Co-BorrowersEligibleEligible
Down Payment SourceGifts, Grants, Down Payment Assistance (DPA)Gifts, Grants, Down Payment Assistance (DPA) + Funds from Non-Owner Occupant Co-Borrower
Secondary FinancingUp to 97% LTV if Subordinate Lien is not a Community Seconds LoanUp to 97% LTV if Subordinate Lien is not a Community Seconds Loan
Community Seconds FinancingCombined Loan-to-Value (CLTV) up to 105%Combined Loan-to-Value (CLTV) up to 105%
Flexible Income SourcesBroader Income Sources AcceptedAccepts Rental Income from Accessory Dwelling Units (ADUs)
Mortgage Insurance Coverage80.01%-85% LTV: 12% Coverage85.01%-95% LTV: 25% Coverage80.01%-85% LTV: 12% Coverage85.01%-95% LTV: 25% Coverage

Key Takeaways:

  • Both Home Possible and HomeReady offer flexible financing options with as little as 3% down.
  • Income Eligibility is capped at 80% AMI for both programs, making them ideal for moderate-income borrowers.
  • Gift Funds and Down Payment Assistance are permitted under both programs, but HomeReady has the added advantage of accepting funds from non-owner occupant co-borrowers.
  • Accessory Dwelling Unit (ADU) Income can be used with HomeReady, providing additional flexibility for those with rentable space.
  • If using a Community Seconds Loan, both options allow a CLTV up to 105%.

Which Option Is Right for You?

  • If you have a non-owner occupant co-borrower contributing to your down payment, HomeReady may be the best fit.
  • If you have broader or unconventional income sources, Home Possible offers more flexibility.
  • Both programs are excellent for borrowers with a 620+ credit score who are seeking low down payment financing.

Need personalized guidance? Contact Joe & Marni Costa and The Park Place Collective Group today to explore your financing options and find the best loan program for your needs!

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