Fannie Mae is changing their My Community program and replacing it with a program called HomeReady. It's very similar to the My Community program, still 3% down which helps many first time homebuyers.
The HomeReady program is designed for credit worthy, low to moderate income borrowers and has expanded eligibility for financing homes in designated low income, minority and disaster impacted communities.
The benefits for homebuyers is a low down payment, 3% down and that can come from a gift. The borrower is not required to contribute any of his own funds into the transaction for a one unit home. They are required to take a first time homebuyer class. There is also reduced mortgage insurance to help with the monthly payment. You do not need to be a first time homebuyer for HomeReady -the My Community Program did require that at least one borrower was a first time homebuyer.
The down payment can come from a gift, grant or a community second (such as the Eden Prairie down payment assistance program). We may also be able to use cash on hand in certain situations. The seller can help with closing costs.
Some new underwriting flexiblities will be the ability to use a non-borrower household member's income as a compensating factor to allow for a higher debt to income ratio (between 45-50%). We can use non-occupant borrowers, such as a parent co-signing. Another new guideline will be boarder income, we'll have to see exactly what is required in this situation but it may help people qualify for the home easier,
There are income limits but if you are buying in a low income census tract area, there is not an income limit. For most properties, the income limit will be 80% of the Area Median Income.
There will be more details coming in September as the program is launched from Fannie Mae. We have already heard from a few of the mortgage insurance companies that they will be supporting the program. This is similar to My Community with a few enhancements to help you purchase a home with a low down payment.