WASHINGTON (8/27/15)--Fannie Mae announced the release of an improved affordable lending product Wednesday, one aimed at helping creditworthy borrowers with lower and moderate incomes.
HomeReady will replace Fannie’s previous affordable mortgage product, the MyCommunityMortgage.
First-time and repeat homebuyers can purchase a home using HomeReady with a down payment of as little as 3%.
Reflecting extensive research from Fannie and input from lenders, HomeReady allows lenders to use Desktop Underwriter (Fannie’s comprehensive credit risk assessment) to automatically flag potentially eligible loans and use Fannie’s integrated suite of risk management tools.
Income from a non-borrower household member can be considered to determine an applicable debt-to-income ratio for the loan, a first for Fannie. 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, according to Fannie research.
The new product also features more favorable pricing that has been simplified for lender use, and eliminates or caps standard loan level price adjustments. Borrowers will be required to complete an online education course preparing them for the homebuying process, which will also provide post-purchase support.
The education course, called Framework, will be provided by the Housing Partnership Network and the Minnesota Homeownership Center. It meets the requirements of the Department of Housing and Urban Development's Housing Counseling Program and the National Industry Standards for Homeownership Education and Counseling.
Fannie will provide additional details to lenders through an upcoming selling guide announcement, and HomeReady guidelines will likely be included in Desktop Underwriter later this year.
According to Fannie, it anticipates accepting loan deliveries under the HomeReady guidelines in late 2015 as well.