In the past, most banks and lenders would require you to pay a certain percentage of money from a specific source of personal funds on any low down payment mortgage transaction if you used gift funds from a person or entity to help you complete the transaction. Today, the government-backed mortgage agencies Fannie Mae and Freddie Mac are loosening those requirements in an effort to make home ownership easy and affordable for low-income borrowers. Instead of requiring borrowers to pay five percent or more from a source of personal funds as a minimum contribution, the two agencies now do not require a minimum on many mortgage transactions.
Although mortgages through Fannie Mae and Freddie Mac help you achieve the dream of homeownership, you need someone to help you navigate through all the paperwork and the guidelines that come with no minimum borrower contribution requirements. At MortgageDepot, one of our mortgage experts will help you qualify for a mortgage with generous credit terms and low down payments with no minimum contribution. Here are some benefits and features we can provide you during the mortgage approval process:
- If the property is in a low-to-moderate income location, then there is no income limit under Freddie Mac’s Home Possible Mortgage Program.
- Expect down payments as low as three to five percent with a flexible source of funds requirements.
- We can qualify you for eligible income of up to 100 percent of the area’s median annual income, and the eligible income can increase in high-cost locations.
- You will receive a free online tutorial from Freddie Mac on the requirements for first-time homebuyers.
Here is what you can expect from the no minimum borrower contribution programs we offer:
- MortgageDepot offers a 95 percent loan-to-value and combined loan-to-value on loans through Freddie Mac’s Home Possible Program. Eligible properties include 1-4 unit properties, planned unit developments, condos and manufactured homes.
- MortgageDepot offers a 97 percent loan-to-value and a 105 percent combined loan-to-value on loans for one unit owner-occupied primary residences through Freddie Mac’s Home Possible Advantage Program.
- First-time homebuyers, low to very low-income borrowers and move up borrowers qualify for the no minimum borrower contribution programs.
- Income limits are set based on the property’s location, and borrowers must meet those income requirements.
- Restrictions apply to borrowers who hold an interest in other residential properties.
Source of Funds
- The programs do not require minimum contributions from a borrower’s personal funds on one-unit properties.
- The programs offer no reserve requirements on one-unit primary residences. There is a two-month reserve requirement on 2-4 unit properties.
- There is no repayment requirement on gift funds.
- The programs allow rental income as a source of funds on a one-unit primary residence transaction.
- Freddie Mac’s Home Possible: 30-year, 20- year and 15-year fixed rate mortgages
- Freddie Mac’s Home Possible Advantage: 30-year fixed rate mortgages
- Enrollment in Homeowner Education Program required
As the housing market in the United States continues to rise, banks and mortgage companies are now creating lending models that offer better concessions to borrowers with less-than-stellar credit. However, many potential borrowers with poor credit or first-time home buyers are unaware of the banks’ loosening of loan approval standards.
At MortgageDepot, we are well aware of the current housing market and why it is a great time to purchase your first home or refinance an existing mortgage even if you think you cannot qualify. Let us help you take advantage of today’s historically low-interest rates by contacting one of our experts today.