A new mortgage program for working-class families
NEW YORK (9/15/15)—Fannie Mae will soon make it easier for working-class households to qualify for a home loan.
The mortgage finance company plans to unveil a program this year that will allow lenders to include income from members of the household who are not borrowers, such as extended family, when qualifying someone for a mortgage (The New York Times Sept. 4).
Previously, that wasn’t the case. The change could make it easier for more African-American and Hispanic families to qualify for a home loan. Nineteen percent of African Americans and 24% of Hispanics live in multigenerational households, according to Fannie Mae.
The program could offer a needed break to people stuck paying rent. A recent Zillow report found that, on average, renters spend 30% of their monthly income on their housing, compared with 15% of homeowners with a mortgage.
The new Fannie Mae program, called HomeReady, is an update of a former program called MyCommunityMortgage, and is scheduled to start in December.
If you’re interested, here’s what you need to know:
- The program will no longer be limited to first-time homebuyers. Expanding the program to repeat buyers should help people who lost equity after the financial crisis;
- The down payment requirement is 3%--down from 5%. Fees and mortgage insurance also will be lower than on standard mortgages;
- The program also will allow rent paid from boarders and, in some cases, income from borrowers who don’t live in the home, such as parents, count toward qualifying; and
- The program is open to low-income borrowers or those living in low-income or minority-dominated areas.
Call your credit union home loan specialists and ask if they plan to offer the HomeReady program and what kind of home loan products they have that might fit your financial situation today.
For related information, read “Why Millennials Are Buying Very Small Houses” in the Home & Family Finance Resource Center.