United Wholesale Mortgage (UWM) reports that it is currently leading the market in offering Fannie Mae's new HomeReady program, which allows qualified lower-income borrowers to purchase homes with as little as 3% down.
The company reports that it made the program available to its network of independent mortgage brokers as soon as the program launched on Dec. 12.
‘We are continually looking for new products and services to maximize our broker partners' business,’ says Mat Ishbia, president and CEO of UWM, in a statement. ‘HomeReady really gives our brokers the ability to provide the lowest mortgage payment for their borrowers.’
‘The HomeReady mortgage allows us to offer an unbeatable competitive advantage for buyers with a low down payment and decent credit scores,’ adds Anthony Bird, owner of Riverbank Finance, a partner of UWM. ‘Combining this program with lender paid mortgage insurance blows away the competition with lower payments and lower costs.’
Highlights of HomeReady program include the following:
- No Fannie Mae adjustments on all loans greater than 80% loan-to-value (LTV) with FICO score of 680 and above, including high-balance loans;
- Not limited to first-time home buyers;
- Available for non-Fannie Mae rate/term refinances up to 95% LTV;
- Relaxed AMI income limits based on census tracts; and
- Non-occupant co-borrowers are permitted up to 95% LTV.
The HomeReady program is basically a revamped version of the MyCommunity program, which Freddie Mac introduced last year. Buyers can put as little as 3% down – but the kicker is how debt-to-income (DTI) is calculated. With HomeReady, a lender will consider income from the borrower, as well as a spouse or cosigner, in order to determine the DTI.
What's more, HomeReady will consider incomes from others planning to live in the home, such as parents, siblings, working children or maybe a roommate, as long as they make 30% or more of household income.
It will even consider the incomes of non-occupants, such as parents, who are willing to help pay the loan, without them being cosigners.
Fannie Mae is careful to emphasize that these loans will not be underwritten the same as the low-doc, no-doc and stated income loans that led to the financial crisis. Borrowers will still need strong credit scores, housing counseling and private mortgage insurance in order to qualify. Plus, the program will not allow balloon or interest-only mortgages.
What's more, HomeReady loans will only be available to a narrow swath of the underserved market, as the loans can only be secured by Fannie-owned properties in designated low-income census tracts. What's more, they are only available to borrowers whose incomes are at or below the median income (AMI) in high-minority census tracts or designated natural disaster areas.
Freddie Mac offers a similar program, called Home Possible Advantage, and the Federal Housing Administration (FHA) already offers loans to qualified low-income borrowers with as little down as 3.5%. All three programs are part of the government's effort to boost homeownership among those with low- to medium-incomes.
All three programs require borrowers to take an online course in order to qualify.