The answer is, no. The down payment amount can vary depending on the type of loan for which you’re applying. Fortunately, there are numerous ways to save, as well as down payment assistance programs and other funding sources for buyers. We compiled a list of alternative options for your down payment. Let’s first see what the down payment amount is for the type of loan you’re looking at.
HomeReady® is a new mortgage program from Fannie Mae that offers financing up to 97% loan-to-value for a primary residence. HomeReady®, which is not restricted to first-time buyers, offers flexibility around income sources, down payments and mortgage insurance requirements.
Borrowers can use HomeReady® for home loan refinancing as well.
The HomeReady® program is ideal for borrowers who have:
Limited cash to make a down payment; as little as 3% down for home purchases
Low income or moderate income
Supplemental income from boarders or renters (Non-occupant borrowers)
HomeReady® Mortgage Down Payments
The HomeReady® program is designed to help more borrowers become homeowners. Borrowers can make a down payment as low as 3% of the cost of the property, and they may use funds from other sources (including gifts, cash on hand, and down payment assistance programs) to make the down payment.
If you make a down payment less than 20% of the cost of the home, you will have to pay Private Mortgage Insurance (PMI), which is discussed further below. HomeReady® provides for a reduced mortgage insurance requirement, which, in many cases will result in a cost savings when compared to a standard conventional or FHA loan.
Income Requirements for HomeReady®
HomeReady® mortgages are intended for low- to moderate-income borrowers, and in many circumstances, it expands eligibility in low-income communities. There is no income limit in low-income census tracts, and the income limit in other areas is typically 100% of area median income.
One unique aspect of the HomeReady® program is the ability to combine income with other people living in the home. To qualify for the loan, a borrower may combine income from other sources, including:
Boarder income, a.k.a. income from a roommate
Non-borrowing household members, including a sibling, working child, friend, or other family member who is living in the home
Non-occupant co-borrowers, such as a parent who wants to help a child qualify for a loan
Rental income from an apartment within the property
Income limitations and eligibility requirements vary by area, so we recommend using the HomeReady® Income Eligibility Lookup Tool or contacting a PennyMac Loan Officer for more information about your specific area.