Posted on 04/28/2018 5:09:28 PM PDT by SeekAndFind
New HomeOne mortgage has no geographic or income restrictions.
It’s been more than three years since Freddie Mac rolled out a conventional mortgage that only required a 3% down payment for certain borrowers.
The program, which is designed for qualified low-and moderate-income borrowers, saw reasonable progress over the last few years, with Federal Housing Finance Agency Director Mel Watt telling Congress last year that Freddie’s 3% down program (along with a similar one from Fannie Mae) was continuing to grow.
But now, Freddie Mac is about to supercharge its 3% down program and launch a widespread expansion of the offering.
Freddie Mac announced Thursday that it is rolling out a new conventional 3% down payment option for qualified first-time homebuyers. What makes this program different is that there are no geographic or income restrictions.
The new program, which is called HomeOne, puts Freddie Mac in direct competition for mortgage business with the Federal Housing Administration, which also only requires 3% down on some mortgages.
According to Freddie Mac, this new offering is not replacing its Home Possible 3% down mortgages. Rather, the program is meant to complement the Home Possible program, which will still be available to low-and moderate-income borrowers.
Freddie Mac said that the new mortgage is designed for first-time homebuyers, who currently make up nearly half of all home purchases.
According to Freddie Mac, a HomeOne mortgage must be underwritten through its Loan Product Advisor, which makes a complete risk assessment based on several factors as it relates to credit, capacity and collateral.
Additionally, the HomeOne mortgage is offered only for conforming fixed-rate mortgages that are secured by a 1-unit primary residence. And, at least one of the borrowers must be a first-time homebuyer.
When all the borrowers are first-time homebuyers, at least one borrower must participate in homeownership education in order to qualify for the mortgage.
The loan can also be used for single-family homes, condos, and townhouses. Manufactured homes are not eligible.
“Freddie Mac’s HomeOne mortgage is part of the company’s ongoing efforts to support responsible lending, provide sustainable homeownership and improve access to credit,” Danny Gardner, senior vice president of single-family affordable lending and access to credit at Freddie Mac, said in a statement.
The HomeOne mortgage will provide our customers the flexibility they need to help borrowers anywhere in the country achieve the milestone of homeownership and overcome the common down payment resource hurdle,” Gardner continued. “HomeOne is a great solution for aspiring homebuyers to grab that first rung of the property ladder and enjoy the financial and social benefits of participating in homeownership.”
In conjunction with making the HomeOne announcement and due to HomeOne’s ability to increase access to credit for first-time buyers, Freddie Mac said that it will be making some changes to the Home Possible program in order to “sharpen its focus” on low-and moderate-income borrowers.
Specifically, Home Possible income limits will be capped at 100% of area median income for properties in designated high-cost areas, designated disaster areas and minority census tracts, except for low-income census tracks, which will continue to have no limits.
According to Freddie Mac, the new HomeOne mortgage will be available beginning July 29, 2018. The income changes for Home Possible will go into effect on the same day.
True - but in most of the country ex California and the Northeast, that mortgage payment all in is still cheaper than renting, so turning in the keys is fairly unlikely if you can afford it. Now if the value drops from $750k to $250k, that’s a different story. But $250k to $220k? Probably going to stay put.
FWIW - the scenario I gave isn’t exactly like my scenario 10 years ago but pretty close, although our income was even higher and neither my wife nor I lost our jobs (and we had ~800 fico scores then and now). Today I own 6 houses/townhomes, including my primary.
OK,that could be true...but remember that California + the Northeast represents a good percentage of the country’s population.And also remember that while the typical mortgage in Missouri might be $150K the typical mortgage on the I-95 corridor (Boston to DC) is closer to $500K.
Median house value in the US is under $250k FWIW (and new build is around $300k). I think lenders should compare rent rates to mortgage rates on those kinds of loans. And yes, 3% down loans in most of California is a lot riskier than most of the rest of the country.
Just what we need more loans designed to find buyers that will never repay. Loans designated for unqualified minorities caused the collapse in the housing market thanks to race pimps like Obama and others that forced the set up.
Exactly.
Good job! If we all were savers and investors, imagine where the country would be.
If you want to avoid MI you need to put 20% down. FHA loans require MI no matter how much you put down.
As a former Fannie Mae, Freddie Mac, FHA and VA underwiter I can attest that there is nothing inherently wrong with a 3%-5% down payment mortgage. We did them for years with a very low foreclosure rate. The trouble started when the underwriting parameters loosened up and the light doc, no doc parameters were put on low down payment plan programs.
I don’t have a problem with no doc loans as long as the credit is good and there is a large down payment. You put 30%-50% down with $50,000 left in the bank I don’t care if you even have a job. Statistically those loans never go into foreclosure. The underwriters job is to manage risk. That’s what Fannie and Freddie used to do until they got pressured into buying the more high risk stuff.
And if anyone here ever listens to Radio, they have been Advertising to make Liar Loans for 2 years now, Stated Income no documentation. They are also making New Mortgages with imputed income(you could rent out 1 room for $800 per month, so we will ADD that to your STATED income in order for you to qualify)
The Sh&t will hit the Fan again soon in real estate
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