HomeReady® is Fannie Mae's 3 percent down, low down payment mortgage loan. It's an affordable mortgage program for low-to-moderate income first-time home buyers.

Fannie Mae launched HomeReady in 2014. The program is an overhaul of the former MyCommunity Mortgage program, which was restrictive and limiting for a lot of buyers.

HomeReady allows for a minimum down payment of 3 percent with lower mortgage rates and loan costs than average.

Who Is Eligible for the Fannie Mae HomeReady Mortgage?

HomeReady is available to home buyers who meet the program's checklist for eligibility. Qualifying does not require a separate mortgage application.

Here are the program requirements:

You must occupy the home you're financing

HomeReady is for primary residences only. Home buyers cannot use the program to finance a vacation home, Airbnb property, or another type of investment property. Co-signers are allowed, but at least one person listed on the mortgage must live in the property.

Your home must be a residential property

HomeReady is for attached or detached single-family residences, including townhomes, condos, rowhomes; and multi-unit homes of two-to-four units. Manufactured homes may be eligible. Commercial properties are not allowed.

Your mortgage must meet conforming mortgage guidelines

HomeReady is a Fannie Mae mortgage program, meaning loans must meet Fannie Mae's conforming mortgage guidelines. Loan sizes must be within local conforming loan limits, buyers must provide proof of income, and loans may not be interest-only.

Your down payment must be at least 3%

HomeReady allows a loan-to-value (LTV) up to 97 percent of the purchase price. Buyers must make a minimum three percent down payment, which may come from any eligible source. Eligible sources include government down payment assistance programs, cash gifts from family or friends, cash grants, and loans.

Your income must be below average for your census tract

To be eligible for HomeReady, a buyer's household income may not exceed eighty percent of the median household income in the home's census tract. Home buyers who earn too much money for HomeReady can access other low down payment loans, including the Conventional 97 program and the FHA 3.5% down payment mortgage.

You may not owe money on more than one other mortgaged home

HomeReady allows home buyers to have a financial interest in up to one other mortgaged property, which may be a vacation home, short-term rental property, or an investment. There are no restrictions on commercial property investments.

You must have a credit score of 620or higher

HomeReady requires a minimum credit score of 620for 1-unit and multi-unit homes. Fannie Mae uses the FICO credit scoring system, which ignores medical debt and collections.

You must attend a homeownership education class

Fannie Mae requires first-time home buyers to complete a homeownership education course as part of a HomeReady approval. The mortgage agency offers an online educational course called HomeView at no cost. Homeownership education reduces mortgage default risk by 42 percent.

HomeReady Income Limits

Fannie Mae created HomeReady in 2014 to help low- and moderate-income renters achieve their American Dream of homeownership. Home Ready home buyers may not earn more than eighty percent of their new home's census tract's income.

Fannie Mae makes income limits available on its website, as shown below.

Home Ready can be used in city, suburban, and rural areas.

HomeReady & Accessory Dwelling Units (ADU) and Boarder Income

When Fannie Mae first announced its HomeReady mortgage in 2014, the agency advertised the program as a mortgage for multi-generational households. It allows boarder income from parents, grandparents, and children who live under one roof and contribute to monthly payments.

With boarder income, buyers can use payments received, dollar-for-dollar, as income toward the mortgage. Proof of payment can be in the form of canceled checks, Venmo or other digital transfers, or bank statements that show deposits into a bank account.

Several years later, the program expanded to allow income from accessory dwelling units (ADU) to be used to qualify for a HomeReady mortgage.

An accessory dwelling unit (ADU) is a living area or smaller home, usually with its own entrance, with at least a kitchen and a bathroom. Accessory units may be in the basement, above the garage, or attached to the subject property.

ADUs may also be separate homes on the land of an existing property.

Income from accessory dwelling units cannot be used dollar-for-dollar as income on an application. Lenders will deduct 25% from rent collected on an ADU to account for vacancies and costs. It's recommended that home buyers use signed lease agreements that prove ADU rental income.

HomeReady Mortgage Rates and Mortgage Insurance

HomeReady is an affordable mortgage program that offers lower-than-average mortgage rates to low- and moderate-income households.

A HomeReady buyer with average credit scores can usually get mortgage rates 0.25 percentage points below standard conventional rates. Buyers with high credit scores receive rates discounted by as much as 0.75 percentage points.

HomeReady also discounts private mortgage insurance for eligible buyers. The typical HomeReady homeowner pays less for PMI and saves hundreds of dollars on mortgage insurance annually.

Because Fannie Mae discounts mortgage rates and private mortgage insurance, HomeReady home buyers save as much as $700 per $100,000 borrowed per year compared to standard mortgage borrowers.

Alternatives to the HomeReady Mortgage

HomeReady is one of several government-backed, low down payment mortgage loans. However, HomeReady isn't suitable for everyone nor will everyone be eligible.

Here are other low down payment mortgage options for first-time home buyers:

• Home Possible: A 3% down payment mortgage from Freddie Mac. Similar to HomeReady, it allows for lower credit scores.
• Conventional 100: A 100% mortgage for first-time home buyers with average credit scores or better.
• Conventional 97: A 3% down payment mortgage for buyers with higher credit scores and income.
• FHA mortgage: 3.5% down payment mortgage for buyers with lower credit scores, and buyers of 2-4 unit homes.
• USDA mortgage: 0% down payment mortgage for buyers with modest income in lower-density areas.
• VA mortgage: 0% down payment mortgage for active-duty military members, veterans, and surviving spouses.
• HomePath®: A Fannie Mae low down payment program for buyers of foreclosed homes.

See all home loans for first-time buyers.

Fannie Mae HomeReady FAQ

What is the minimum credit score for HomeReady?

HomeReady requires a 620minimum credit score. HomeReady uses the mortgage FICO scoring system. Learn more about the credit score needed to buy a home.

Does HomeReady allow non-occupant co-borrowers?

Yes, mortgage applicants can add other people to a HomeReady mortgage application, such as parents or relatives, who are willing and financially able to assist with the mortgage but will not live in the home.

Do I need a signed lease to use boarder income and income from an ADU?

No, signed leases aren't required to use boarder income and income from an ADU. However, without a signed lease or proof of contract, a home appraiser will assign a rent price on your behalf, which may be less than what you collect.

Can I get a HomeReady mortgage if I don't have a credit score?

Yes, HomeReady is available to home buyers with no credit score.

What is the minimum down payment for HomeReady?

HomeReady requires a 3% minimum down payment. Down payment money can come from any eligible source, including savings accounts, cash gifts, employer benefits, and unsecured loans.

What is the maximum allowable debt-to-income ratio for HomeReady?

HomeReady enforces a strict 50% debt-to-income limit.

Is HomeReady for first-time home buyers only?

HomeReady is available for first-time home buyers, repeat home buyers, and refinancing households.

Can I use gift funds with a HomeReady mortgage?

Yes, HomeReady mortgage guidelines allow cash gifts for a down payment.

Can I purchase a multi-unit home using HomeReady?

Yes, HomeReady allows the purchase of a 2-4 unit property so long as the buyer lives in one of the home's available units. Multi-unit homes require larger down payments. 2-unit homes require a fifteen percent down payment, and 3-4 unit homes require a twenty-five percent down payment.

Can I use the HomeReady mortgage for community land trusts?

Yes, home buyers can use the HomeReady mortgage for community land trusts that meet Fannie Mae's approval standards.

Can I use an adjustable-rate mortgage with HomeReady?

Yes, home buyers can use adjustable-rate mortgage financing with HomeReady.

Do I apply for a HomeReady mortgage with Fannie Mae directly?

No, Fannie Mae is not a mortgage lender. Apply for your mortgage with a mortgage lender. Your application will be considered for HomeReady automatically.

Do I need to make a 20% down payment with HomeReady?

No, HomeReady doesn't require a 20% down payment. Home buyers may put down as little as 3 percent as part of their HomeReady approval.

Where do I get HomeReady homeownership education and counseling?

Fannie Mae offers free, qualifying homeownership education through its HomeView website.