HomeReady program helps first-time buyer purchase with 5 percent down

Loan officer: Alex Greer. Property type: Townhouse in Fremont. Appraisal value: $670,000. Loan type: Conventional 30year fixed. Loan amount: $636,150. Rate: 4.125 percent. Backstory: Fannie Mae’s HomeReady program is the best 30-year conventional loan offered by lenders. It is “designed to help lenders confidently serve today’s market of creditworthy, low- to moderateincome borrowers, with expanded eligibility for financing homes in designated low-income, minority, and disasterimpacted communities.”

Fannie Mae designates all of the Bay Area’s ZIP codes as low- to moderate-income areas making any home in the Bay Area eligible for the HomeReady program. In addition, borrowers must complete an online class about homeownership that takes about three hours.

In this particular scenario, the borrower was looking to purchase a property within an eligible ZIP code and had completed the required homeownership education. The borrower was also able to take advantage of rent they had been receiving from a roommate. This is the only conventional loan program that counts room rent as income just as long as the roommate will be moving with the borrower to the new residence. Room rent income is part of the HomeReady program’s expanded eligibility. Other benefits include a higher threshold for debt-to-income and loan-to-value ratios.

Once all of the eligibility requirements were confirmed, the purchase loan was submitted to the lender with a 725 credit score, 95 percent loan-tovalue ratio and moderate income. Twenty-one days later, the borrower was a new firsttime homeowner.

Alex Greer, the Mortgage Outlet, (408) 352-5147, agreer@themortgageoutlet.com.