Fannie Mae Expands Access to Credit
Fannie Mae announced Tuesday an innovative lending option aimed at helping creditworthy borrowers with lower and moderate incomes have access to an affordable, sustainable mortgage. HomeReady mortgage features new functionality for lenders through Desktop Underwriter to automatically flag potentially eligible loans and fully leverage Fannie Mae’s integrated suite of risk management tools for greater certainty and efficiency, the company announced in a press release.
“HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, Vice President for Underwriting and Pricing Analytics at Fannie Mae. “We are also confident this mortgage option will create business opportunities for lenders serving the changing demographics and borrower needs seen in today’s market. The combination of our risk management safeguards and an innovative online education tool will put HomeReady borrowers in a strong position to succeed in homeownership.”
HousingWire reports that with the new update, first-time and repeat homebuyers can purchase a home using HomeReady with a 3% down payment. Previously, at least one co-buyer had to be a first-time buyer in order to qualify for the 3% down program.
For the first time, income from a non-borrower household member can be considered to determine an applicable debt-to-income ratio for the loan, helping multi-generational and extended households qualify for an affordable mortgage.
Also new to the program, as reported by the Wall Street Journal, lenders are now allowed to include income from non-borrowers within a household, such as extended family members, toward qualifying for a loan. The Wall Street Journal points out that lifted regulations will benefit lower-income and multigenerational families.
Fannie Mae’s release said that the group’s research indicates that these extended households tend to have incomes that are as stable or more stable than other households at similar income levels, positioning them well for homeownership. Other HomeReady flexibilities include allowing income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to augment the borrower’s qualifying income. First-time and repeat homebuyers can purchase a home using HomeReady with a down payment of as little as 3%.
HomeReady income guidelines are reflected in maps available on Fannie Mae’s website.