HomeOne Loan: First Time Home Buyer Program

Home Possible graphic Are you a first-time homebuyer looking for a mortgage option that suits your needs? The HomeOne loan program might be the perfect solution for you. Designed specifically for first-time buyers, the HomeOne loan offers several benefits that can make homeownership more attainable and affordable. In this article, we will delve into the features and advantages of the HomeOne loan, helping you understand how it can help you achieve your dream of owning a home.

What is a HomeOne Loan?

A HomeOne Loan is a conventional loan that could be the perfect mortgage solution for many home buyers. It has attractive features such as a 3% down payment, no geographic or income limits, and a more flexible debt-to-income ratio than other conventional loans.

These features, combined with the current low interest rates, make HomeOne Loans an attractive option for first-time home buyers. Unlike other conventional loans, which typically require a minimum of five percent down payment, HomeOne allows borrowers to put down as little as three percent without any additional costs or restrictions. This can significantly reduce closing costs and monthly payments.

HomeOne also does not have any geographic limitations on where the loan can be used, so it can be used to purchase homes in rural areas or suburban neighborhoods all across the country.

First-Time Home Buyer Requirements for a HomeOne Loan

If this loan is for the purchase of a house, at least one borrower must be a first-time buyer.

Down Payment Requirements for a HomeOne Loan

1-unit with a minimum 3% down payment

Competitive Interest Rates

HomeOne Mortgage offers interest rates that are often lower than other conventional loans. However, the interest rate provided to you may vary based on factors such as your credit score, job history, and other factors.

See today's interest rates.

Eligible Property Types for HomeOne Loans

The HomeOne loan permits the following property types:

1 unit owner-occupied properties,
condo (Freddie Mac approved),
PUD (planned unit development) or
one-unit manufactured homes (A down payment of at least 5% is required.)
Investment properties are not allowed.

HomeOne Loan Occupancy Requirements

The borrower must occupy the mortgaged property as a primary residence. Non-occupant co-borrowers are allowed on mortgages for 1-unit properties with a 5% down payment.

Loan Limits for a HomeOne Loan

The Possible Home program provides loans to borrowers up to the conforming loan limits for single-unit properties in the contiguous United States, ranging from $726,200 to $1,089,300.
See conforming loan limits.

Understanding PMI for HomeOne Loans

You must agree to pay private mortgage insurance (PMI) up until you have 78% or more home equity to be eligible for a HomeOne loan. The cost of this insurance is deducted from your monthly mortgage payment as a percentage of the total loan balance. When you have paid off 22% of your mortgage, your mortgage insurance will be immediately canceled. Borrowers pay mortgage insurance premiums for less than what the market will bear.
Read more about private mortgage insurance.

Credit Score Requirements for HomeOne Loans

It is recommended that applicants for Freddie Mac's HomeOne loan have credit scores of at least 620 to be considered. This is due to the HomeOne loan's low minimum required down payment of just 3% of the total loan amount.

Income Limits for HomeOne Loans

No income limits!

Using Gift Funds for a Down Payment on HomeOne Loans

Donations, grants, and even money from your savings might count toward the down payment and other charges associated with completing the deal.

It is recommended that you get in touch with the lender that you are dealing with in order to discover the particular requirements for gift cash.
Read more about gift funds for down payments and closing costs.

HomeOne Loan Guidelines for Seller Concessions

Because of the HomeOne lending program, sellers can negotiate price reductions with prospective purchasers depending on the down payment size. If the buyer puts less than 10% of the purchase price down on the property, the seller can offer up to 3% of the sales price as a concession towards the down payment that the buyer will need to make.

If the buyer makes a deposit of at least 10% of the total sales price, the seller can offer a concession of up to 6% of the total sales price. It would help if you verified with the lender you are dealing with to learn the precise standards they adhere to regarding seller concessions for HomeOne loans.

The purchase agreement should specify any sales concessions the seller is willing to make.

Requirements for Homebuyer Education for HomeOne Loans

If all borrowers are first-time buyers, one borrower must complete a homeownership education course before settlement.

Guidelines for the Debt-to-Income Ratio for HomeOne Loans

Consider the debt-to-income (DTI) ratio guidelines when applying for a HomeOne loan. The DTI ratio compares a borrower's monthly obligations to their gross income. The possible home program by Freddie Mac has a maximum DTI ratio of 45%. This means your monthly obligations, including your proposed mortgage, cannot exceed 45% of your gross monthly income.

Keep in mind that in addition to the DTI requirements set by the Possible Home program, lenders may also have their own. Always check with your lender to ensure you meet their requirements. Additionally, having a lower DTI ratio can improve your chances of loan approval and help you get a better loan rate.
Read more about debt-to-income ratios.

Qualifying for a HomeOne Loan with a Cosigner

Improve your chances of being accepted for a HomeOne loan by securing it with a co-signer, particularly if you have a lower credit score or earnings. A co-signer is an individual who agrees to take on the financial obligation of the loan with you and must sign all loan documents.

A co-signer must meet the same income and credit requirements as the primary borrower, but their income can be used to secure the loan. With a co-signer, the lender will consider both the borrower's and co-signer's income and credit scores, increasing the chances of loan approval.

Remember that the co-signer will be equally responsible for the loan, so choose someone reliable and willing to take on this responsibility. Additionally, having a co-signer can help you get a better loan rate.

Summary

In conclusion, the HomeOne loan program presents a valuable opportunity for first-time homebuyers to enter the housing market with more favorable terms. With its low down payment requirement, reduced mortgage insurance costs, and flexible eligibility criteria, the HomeOne loan makes homeownership more accessible and affordable for those who are just starting their homeownership journey. If you're a first-time buyer looking to fulfill your homeownership aspirations, consider exploring the benefits of the HomeOne loan and take a step closer to turning your dream into a reality.

SOURCE:
HomeOne Mortgage
HomeOne Mortgage Underwriting Methods and Requirements
Frequently Asked Questions