What is a HomeReady mortgage?
HomeReady is Fannie Mae's conventional mortgage option for buyers with qualifying income within the program's limits. It combines a lower down payment with flexible funding sources and mortgage insurance that can be removed when cancellation requirements are met. I offer HomeReady through loanDepot and can help you compare it with other options.
You can be a first-time buyer or someone who has owned a home before. The property will be your primary residence. HomeReady is the mortgage itself; it is not a down payment assistance grant. Approved assistance can sometimes work alongside it.
HomeReady guidelines at a glance
- Income: Total annual qualifying income cannot exceed 80% of the area median income for the property's location.
- Down payment: As little as 3% for an eligible one-unit, conforming fixed-rate purchase. Other property and loan types have different limits.
- Occupancy: A primary residence you will live in, rather than a vacation home or a stand-alone investment purchase.
- Credit and debts: Automated underwriting reviews the complete application; loanDepot and mortgage-insurance requirements also apply.
- Education: When all borrowers are first-time buyers, at least one completes qualifying homeownership education for a purchase.
- Mortgage insurance: Required when the first mortgage exceeds 80% of the home's value.
How does the income limit work?
The income ceiling follows the property address. It is based on area median income, often shortened to AMI, rather than a single statewide salary limit. We will review the income used to qualify all borrowers and check the limit for the home you are considering.
Income documentation still matters, whether you earn wages, work for yourself, or have another eligible source. I can help you understand what documents are needed. If HomeReady's income limit does not fit, we can compare other conventional loans and FHA financing.
Plan your down payment and closing costs together
On an eligible one-unit home, approved gifts, grants, and assistance can help cover upfront costs. A minimum contribution from your own funds is not required for qualifying one-unit transactions, but the source of funds must meet the rules. Closing costs and any required reserves are separate from the down payment.
Let’s look at your whole upfront plan.
A lower down payment is just one part of the decision. I’ll help you compare the payment, cash to close, assistance eligibility, and loan choices that fit your next home.
HomeReady can work with eligible Community Seconds assistance. Any assistance program used through loanDepot must be approved by loanDepot, and combined-loan limits vary by transaction. We will confirm compatibility before treating a program as part of your plan. Explore down payment assistance options.
Credit, monthly debts, and mortgage insurance
The supplied loanDepot guidelines require an Approve/Eligible result from Fannie Mae's automated underwriting system, Desktop Underwriter. Manual underwriting is not available under this offering. The system evaluates the application rather than using one published debt-to-income maximum for every borrower.
For loans requiring mortgage insurance, the guide lists a minimum credit score of 600 for borrower-paid insurance and 620 for lender-paid insurance. These are insurance requirements, not stand-alone approval thresholds; the full application and insurer requirements must also be met. I'll review which structure fits your qualifications.
HomeReady has reduced mortgage-insurance coverage requirements in some higher loan-to-value ranges. Your actual premium depends on the loan and insurance quote. Borrower-paid mortgage insurance can be cancelled when the applicable requirements are satisfied. Lender-paid insurance has different pricing trade-offs, so we will compare the full cost rather than just one line of the payment.
Which homes and down payments fit?
The 3% down option applies to eligible one-unit conforming fixed-rate purchases. Under the supplied loanDepot matrix, one-unit high-balance loans and adjustable-rate loans generally allow up to 95% first-mortgage financing, or at least 5% down without an eligible assistance combination.
Eligible two-to-four-unit primary residences can allow up to 95% financing for conforming loans. High-balance limits are lower: 85% for two units and 75% for three or four units. Certain manufactured homes allow up to 95% financing, subject to additional requirements. I'll confirm the required borrower contribution, reserves, and property rules for your specific purchase.
Eligible homes can include single-family homes, approved condos, planned-unit developments, modular homes, and qualifying manufactured homes. Condos must meet project requirements; non-warrantable condos and condotels are not eligible under this guide. Read our condo buying guide if that is part of your search.
Can family help with the loan?
Family help can take different forms, including eligible gift funds or a qualified non-occupant co-borrower. A non-occupant borrower is someone on the loan who will not live in the home. The supplied guide does not allow non-occupant borrowers above 95% first-mortgage financing, so that arrangement does not fit the standard 3%-down structure.
We will explain the income review, ownership, and repayment responsibilities before you decide. Visit Buying a Home With Family for more planning questions.
Education, refinancing, and your next step
Homebuyer education helps you prepare for the purchase and the responsibilities of ownership. I'll confirm which course meets your loan's requirements before you enroll. Fannie Mae's HomeView course is one education resource to explore.
HomeReady also supports eligible limited cash-out refinances. For financing above 95% up to 97%, the existing loan must be owned or securitized by Fannie Mae. This is not a general cash-out equity program. Texas refinances have additional requirements. Explore refinance options if you already own.
Start with your goals, income documents, and a rough idea of the home or neighborhood. We will check the income limit, compare programs, and map your upfront costs and payment. The First-Time Home Buyer Hub and buyer guides can help you prepare.
HomeReady questions, answered
Do I have to be a first-time buyer?
No. HomeReady serves eligible first-time and repeat buyers. You must meet the income, occupancy, property, and loan requirements.
Can I buy with 3% down?
Yes, on an eligible one-unit conforming fixed-rate purchase. High-balance, multi-unit, manufactured-home, and adjustable-rate transactions have different limits. Closing costs and any required reserves also need to be planned for.
What is the HomeReady income limit?
Total annual qualifying income cannot exceed 80% of AMI for the property's location. I'll check the address-specific limit and review the borrowers' qualifying income.
Can I use gift funds or down payment assistance?
Yes, eligible gifts and approved assistance can be used within program rules. Any assistance paired with this loan through loanDepot must be loanDepot-approved. We will confirm the source, documentation, and financing limits.
Does HomeReady have mortgage insurance?
Yes, when the first mortgage is above 80% of value. Borrower-paid mortgage insurance can be removed when cancellation requirements are met. I'll explain the premium and compare it with other loan options.
Can a parent co-sign without living in the home?
A qualified non-occupant co-borrower can be eligible, but not with first-mortgage financing above 95% under the supplied guide. We will compare that structure with gift funds or other options.
Do I need a homebuyer class?
For a purchase when all borrowers are first-time homebuyers, at least one borrower must complete qualifying homeownership education. I'll confirm the approved education path for your application.
How does HomeReady compare with FHA?
HomeReady is conventional financing with an income limit and cancellable borrower-paid mortgage insurance. FHA has different qualification and insurance rules. I can compare the upfront costs and total monthly payment for both using your situation.
Reviewed using loanDepot's HomeReady guide dated May 14, 2026 and current Fannie Mae HomeReady information. Program and mortgage-insurance requirements can change. I'll confirm the current guidelines for your application.