Both present advantages as well as drawbacks that potential borrowers must consider when choosing the best loan program for their needs.
The Home Possible program is a conventional loan designed primarily for moderate- to low-income homebuyers. It allows borrowers with limited incomes to pay a smaller down payment than would normally be required for a conventional loan, making it possible to purchase a home with just 3% down. It also offers lenders the ability to waive appraisal and title requirements on certain loans. Lastly, borrowers can use gifts from family members or other organizations to cover their down payment.
The HomeReady program is an FHA loan option for low- to moderate-income homebuyers who may not have the means to make a sizeable down payment. It allows borrowers to obtain a loan with as little as 3% down and offers flexible underwriting guidelines to potentially qualify more buyers than traditional loan programs. Another advantage to the program is that monthly mortgage insurance premiums are often lower than other loan programs. It also allows for down payments to come from sources like grants, employer assistance programs, or gifts from family members.
Both programs offer potential benefits to homebuyers but there are key differences that borrowers should consider before deciding which one is best for them.
For starters, the HomeReady program requires borrowers to take online homeownership courses and counseling sessions, while the Home Possible program does not. In addition, the HomeReady program requires borrowers to meet certain income requirements and limitations. The Home Possible program does not have similar restrictions.
When it comes to closing costs, the HomeReady program provides additional incentives for lenders, such as allowing lenders to waive settlement and other loan-related fees. However, the Home Possible program offers no such incentives.
Finally, the HomeReady program requires borrowers to have at least one 'non-occupant' cosigner, if necessary, while the Home Possible program does not.
In summary, the Home Possible and HomeReady programs both provide advantageous loan options for first-time homebuyers. However, each one has different requirements and restrictions in order to qualify for the loan. When deciding which program is the best for them, borrowers should carefully consider the differences between the two programs and how they align with their unique financial situation. Ultimately, it’s always best to speak to a professional to get expert advice on which program is right for you.
This article was contributed on Dec 12, 2023