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HomeReady Versus Home Possible

HomeReady Versus Home Possible

  • Program Goals
  • In addition to having similar names, HomeReady and Home Possible are two of the most popular low down payment mortgage programs. Both programs offer unique features that improve your ability to qualify for a mortgage. Both programs also share the common goal of making homeownership more achievable for borrowers with low-to-moderate incomes and limited financial resources.  Borrowers are often choosing between a HomeReady or a Home Possible mortgage so it is important to understand how the programs are both similar and different.  Each program offers compelling benefits but there also differences that may make the programs less attractive to borrowers.  

    Below we compare HomeReady versus Home Possible to enable you to understand the program that is right for you. Understanding the qualification requirements and attributes for both programs positions you to choose the mortgage that best meets your personal goals.

  • Unique Features of HomeReady Mortgage Program
  • One of the unique elements of the HomeReady program is that it allows borrowers to qualify using non-traditional income sources. Borrowers can include income from a non-occupant co-borrower, such as a parent, rental income from boarders and income from a non-borrower household member to help qualify for the loan. The ability to use these additional income sources is a key differentiator compared to other mortgage programs.

    The program also permits the use of non-traditional credit profiles for borrowers with a limited credit history or no credit score. Additionally, borrowers with higher credit score may pay a lower mortgage rate and potentially reduced private mortgage insurance (PMI) fees relative to standard loan programs. In short, HomeReady applies more flexible qualification guidelines to enable more borrowers to participate in the program.

  • Unique Features of Home Possible Mortgage Program
  • The Home Possible program also enables borrowers to incorporate non-traditional income sources in their loan application. Applicants can include rental income from boarders as well as income from the units in a multifamily property that you do not occupy. For example, if you purchase a three unit property with a Home Possible loan, you can use the rental income from the two units you do not live in to qualify for the mortgage. This feature is especially helpful for multi-generational families where the children may live in one unit of a property and the parents live in another unit.

    Another compelling feature of the Home Possible program is that borrowers with lower incomes and borrowers that purchase properties in designated low income census tracts may pay a lower mortgage rate.

  • Similarities Between HomeReady and Home Possible Mortgage Programs
  • In addition to sharing the common goal of making homeownership more affordable, the HomeReady and Home Possible programs share much in common. Both programs enable you to purchase a single family home with a 3% down payment and no minimum borrower financial contribution. So instead of using funds out of your bank account you can use a community or affordable seconds loan, down payment or closing cost assistance grant or gift to pay for your down payment and closing costs. The ability to buy a home without paying any money out of pocket lowers the financial barrier to buying a home and is a significant benefit of both programs.

    Other program similarities include:

    • the ability to purchase multifamily properties with up to four units
    • require applicants to live in the property
    • permit the use of non-traditional credit profiles
    • apply income limits depending on where the property is located
    • apply loan limits
    • require monthly private mortgage insurance (if LTV ratio > 80%)
    • require homebuyer counseling class

    Home Possible and HomeReady mortgages are provided by traditional lenders including national, regional and local banks, mortgage brokers and credit unions. We recommend that you compare the loan terms and eligibility guidelines for both program to find the mortgage that is right for you. The table below compares rates and fees for leading lenders near you.  Contact multiple lenders to understand the low down payment programs they offer.  Shopping for your mortgage is also the best way to save money on your loan.

  • Rate Details*
    Loan Program:  
    Monthly Payment:  
    Points  More Info:
    Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Total Lender Fees:  
    Loan type:  
    Property Value:  
    Loan to Value:  
    Credit Rating:  
    Date Submitted:  
    Monthly Housing Payments
    P & I More Info
    Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
    Mortgage Insurance More Info
    Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
    Property Tax More Info
    Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
    Homeowner Insurance More Info
    Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
    Homeowner Association Fee More Info
    Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
    (If Any)
    Total Monthly Housing Payments
    Lender Fees
    Points More Info
    Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Origination Fee More Info
    Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
    Credit Report Fee More Info
    Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
    Tax Service Fee More Info
    Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
    Processing Fee More Info
    Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
    Underwriting Fee More Info
    Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
    Wire Transfer Fee More Info
    Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
    (If Any)
    FHA Upfront Premium More Info
    FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
    (If any)
    VA funding Fee (If any)
    Flood Fee
    Other Fees More Info

    Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

    The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

    Total Lender Fees
    *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
    Current Mortgage Rates as of November 21, 2018
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    • APR
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    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
  • Differences Between HomeReady and Home Possible Mortgage Programs
  • Although HomeReady and Home Possible have many features in common, there are also several important differences between the programs. The HomeReady Program applies a lower minimum credit score and a more flexible approach to using non-traditional credit profiles. HomeReady may also allow a higher debt-to-income ratio for borrowers under certain circumstances, which enables you to qualify for a larger mortgage.

    On the other hand, the reserve requirements, or how much money you are required to hold as savings when you loan closes, are lower for Home Possible, especially for multifamily properties. Additionally, both programs require the same borrower financial contribution regardless or property type but the Home Possible program requires a significantly lower down payment for multifamily properties, another reason why it is especially well-suited for multi-generational households.

    Use the FREEandCLEAR Lender Directory to find lenders that offer the Home Possible and HomeReady programs and many other no or low down payment programs.


  • Detailed Comparison of HomeReady Versus Home Possible Mortgage Programs
  • The table below compares the specific features of HomeReady versus Home Possible. As the table illustrates, the programs have numerous similarities as well as distinct differences including borrower qualification requirements, minimum down payment and reserves. Use the information outlined below to determine the loan that fits your personal and financials circumstances and objectives.

    HomeReady Home Possible

    Down Payment

         1 unit property


         2 unit property


         3 - 4 unit property


    Borrower Personal Financial Contribution

         1 unit property


         2 - 4 unit property

      3% if loan-to-value (LTV) ratio > 80%; none if LTV ratio <= 80%
      3% if LTV ratio > 80%; none if LTV ratio <= 80%

    Credit Score

         1 unit property


         Multifamily Property

      640 - 700 depending on LTV ratio and debt-to-income ratio

    Non-Traditional Credit Profiles

      Allowed but less flexible than HomeReady

    Debt-to-Income Ratio

      43% - 50%
      43% - 45%

    Reserve Requirement

         1 unit property

      0 - 6 months depending on LTV ratio, debt-to-income ratio and credit score
      0 - 2 months

         Multifamily Property

      6 - 12 months depending on LTV ratio, debt-to-income ratio and credit score
      2 months

    Loan Limits

      Conforming loan limit
      Conforming loan limit

    Income Limits

      100% of area median income unless property is in a designated low-income census tract (no limit)
      100% of area median income unless property is in a designated low-income census tract (no limit)

    Private Mortgage Insurance (PMI)

      Monthly fee, potentially at reduced rate
      Monthly fee

    Occupancy Requirement

      Borrower must occupy property
      Borrower must occupy property

    First-Time and Repeat Homebuyers?


    Homebuyer Counseling Class

      Required for first-time homebuyers

    Mortgage Rates

      Potentially lower rate if credit score > 680
      Potentially lower for low income borrowers or if the property is in an underserved area

    Program Offered By

      Participating lenders
      Participating lenders
  • Use our mortgage quote feature to compare loan quotes from multiple lenders. Our quote feature is free, personalized, requires minimal information and does not affect your credit. Comparing multiple mortgages enables you to find the best loan terms.

  • Sources:

    Home Possible:


About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael


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