Make Your Dream Home Possible

Homeownership comes with many benefits, from building equity and security to creating stability for your family. However, for some, the dream may seem out of reach. It may be that you haven’t saved enough or don’t make enough in your current position, or maybe you don’t have the best credit. At On Q Financial, we believe the Dream of Homeownership is Inclusive. That’s why we’ve gathered as many product options as possible to ensure we have more ways to say yes! The Freddie Mac Home Possible program is one of those products.

What is Home Possible?

Freddie Mac established the Home Possible program to help those with significant barriers to homeownership. The Home Possible conventional loan program includes low down payment options and low-income qualifying guidelines.

Home Possible mortgages are fully amortizing, meaning you will pay the loan off by the end of the loan term provided you have made all of your payments in full and on time. Borrowers who qualify for a Home Possible loan may also have the option between 15 and 30-year terms, giving you more power to plan!

Now may be the time to start building a foundation for your future, and a Home Possible mortgage could be the right first step. We encourage you to keep reading more about this program as we discuss the benefits and costs. However, if you have questions, our expert On Q Financial Mortgage Consultants are always available to answer any concerns and give you an idea of your options. Don’t hesitate to reach out!

The Pros and Cons

A Home Possible loan comes with various benefits for low-income borrowers. No first-time homebuyer requirements allow previous homeowners to get back on the path to homeownership or current homeowners to change to something more adequate like a retired couple downsizing or a newly married couple upgrading.

With a down payment requirement of only 3%, you don’t have to have a substantial savings account to take advantage. However, paying less than 20% means that you will also have to pay mortgage insurance. Still, the provider must automatically terminate your PMI once your mortgage balance reaches 78% of the original purchase, assuming you are in good standing and haven’t missed any payments. You can request cancellation of your mortgage insurance once you reach 80% with an appraisal, however. Additionally, you only have to pay your monthly mortgage insurance premium and won’t have to pay an upfront mortgage insurance premium.

You can see how a Home Possible loan could be better for some low-income borrowers than some government-backed options. With a credit score requirement of only 620 or greater with automated underwriting approval, Freddie Mac has made the program as accessible as possible!

A deal this sweet has to come with a catch, right? Well, a Home Possible mortgage comes with some requirements. First, borrowers must complete an approved homebuyer education course. These courses are usually online classes that educate the homeowner on their responsibilities as homeowners and their options should they experience financial hardship. One of the course options we recommend is Freddie Mac’s own Credit Smart course, which satisfies both the Home Possible requirements and the Home One program requirements, and it’s free!

Home Possible mortgages are restricted based on area income limits for the property location. To qualify, borrowers cannot make more than 80% of the area’s median income. Use Freddie Mac’s free tool to find out what the limits are for your area!

Finally, Home Possible mortgages also come with property restrictions, although they are a lot less strict than other assistance programs. Home Possible can be applied to 1-4 unit properties, condos, and planned unit developments. Borrowers can even purchase manufactured homes with a Home Possible loan, though manufactured homes require a minimum fico score of 620 and a maximum of 95% loan-to-value. Also, if you are looking for a larger home, 2-4 unit properties have more extensive minimum contribution requirements:

Maximum LTV/TLTV/HTLTV Ratios

2-Unit85%/95%/95%
3- and 4-Unit85%/95%/95%

Ask an expert On Q Mortgage Consultant if you have questions about whether your property qualifies for a Home Possible mortgage.

Who Can Benefit?

Low-income home shoppers were traditionally limited to government-backed loans due to their low income. These government-backed loans often came with stringent requirements that made it difficult for borrowers to qualify for the programs. Home Possible offers low-income borrowers a conventional alternative!

Borrowers like freelance professionals, recently married couples, long-time renters, those looking to downsize, and even families looking to purchase a new home and keep the old one all stand to benefit from Home Possible mortgages.

Recently Married Couples

Weddings can be expensive! Couples with a recently wiped-out savings account can still afford a home with Home Possible, thanks to the low down payment requirements and flexible gift fund options.

Long Time Renters

Suppose you’ve lived with your roommates for at least 9-12 months. In that case, their rental payment may count up to 30% of your qualifying income, allowing you to purchase a new home with a Home Possible mortgage provided you continue living together!

Downsizing

Homeowners saving for retirement or looking to reduce their home size and payments may not qualify for government-backed or first-time homebuyer loans. Home Possible allows them to make the change without having to sacrifice their retirement savings.

Buying a Second Home

Families who suddenly need to move for a new job or school do not have to sell their current home to be eligible for Home Possible. Home Possible allows ownership of another property, meaning you can keep your original home!

Home Possible Closing Costs

Home Possible loans allow multiple options to fund down payment and closing costs, including:

  • Gifts
  • Personal funds
  • Affordable second mortgages
  • Employment assisted housing

With so many options, Home Possible loans are one of the most accessible conventional loan programs available. To better understand your specific circumstances, it’s best to talk with an expert On Q Financial Mortgage Consultant.

Can You Refinance With a Home Possible Mortgage?

With mortgage rates at historic lows, we have seen an increased demand for refinancing, and with good reason. Refinancing allows you to change your loan terms, mortgage rate, and in some cases, enable you to cash out on your equity.

Refinancing into a Home Possible mortgage could be an excellent opportunity to optimize your rate and term; however, there is one catch. Home Possible does not allow cash-out refinancing, meaning you cannot pull money out with your refinance. Still, refinancing into a Home Possible mortgage could allow you to structure your mortgage to better suit your needs.

Reach out to one of our expert Mortgage Consultants today to find out if you qualify!

What if You Don’t Qualify?

Home Possible is a fantastic product for many borrowers. With fixed or ARM options, low down payment options, and cancellable mortgage insurance, it is one of the most accessible conventional loan programs. Nevertheless, no program will be right for everyone. Income and credit score requirements may make some borrowers ineligible.

On Q Financial knows there is no one-size-fits-all mortgage program. That’s why we’ve gathered an impressive range of products to find the option that’s right for you! An expert On Q Mortgage Consultant can help you find options tailored to your specific needs. Our Mortgage Consultants are experienced in finding the perfect home loan fit from our wide range of products. The best part is our Mortgages Simplified™ journey means less stress and more ways to say yes!

Reach out to an On Q Financial Mortgage Consultant if you have questions, or check out our easy-to-use calculators to determine how much you can afford!

The following loan scenario is only an example. Actual amounts, fees, and rates vary depending on each individual borrower’s situation and additional factors. Loan scenario is based on a fixed 30-year Conventional loan with a purchase price of $200,000, 3% down payment equaling $6,000, Interest rate of 3.37%, and APR of 4.35%. Additional estimated funds due at closing $5,110. Approximate monthly payment of $1,265. Loan scenario does not include additional costs/fees associated with monthly mortgage expenses such as HOA fee. All amounts shown are estimates and will vary for each loan. Rates and fees are subject to change at any time. This is not a commitment to lend or extend credit. Programs are subject to change. Loan approval is subject to applicant’s qualification for a loan program. OnQ0226210681Y00000CPSKJ

About the Author

Before opening On Q Financial in 2005, John Bergman originated and funded 450 units a year as a loan officer. He founded the company with just $1M of personal life savings—committed to his vision for building the best independent mortgage organization in the industry.

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