For many years, when it comes to buying a home, the FHA loan program has been one of the most popular choices for people. But with the downturn in the real estate and with the rising number of homes being owned by lenders (including Fannie Mae), the Fannie Mae HomePath loan program is getting increasingly popular with home buyers.
Fannie Mae HomePath Mortgage Program: Advantages
The HomePath Mortgage Program was created by Fannie Mae because of the large number of homes that are owned by Fannie Mae and their desire to sweeten the financing offer to entice home buyers to buy them. Some of the things that Fannie Mae did with the HomePath loan program actually make it a more attractive option than an FHA loan. There are three main advantages of a HomePath loan over an FHA loan: a smaller down payment,
Fannie Mae HomePath Loans: Smaller Down Payment
The HomePath loan program requires less money for your downpayment – and let’s face it, when you are buying a home every dollar you can save on a down payment can go to other things like furniture, repairs or moving costs. The HomePath mortgage requires a minimum down payment of 3% versus 3.5% required for an FHA mortgage and both of the loan programs allow the down payment to be “given” to you under approved circumstances.
HomePath Mortgages Require No PMI
PMI stands for Private Mortgage Insurance. Mortgage insurance is generally required for conventional loans that have less than 80% loan-to-value. With FHA loans, they also require mortgage insurance. With the Fannie Mae HomePath mortgage program, no PMI / mortgage insurance is required. Because PMI is not required on a HomePath loan, expect a monthly payment with a HomePath loan to be less than with an FHA loan or conventional loan with less than 80% loan-to-value.
HomePath Loans: No Appraisal Required
When buying a new house, virtually all loan programs require that you get an appraisal from a certified appraiser to prove the homes value. Not with the HomePath loan program: there is no appraisal required on a HomePath loan.
When financing a home, both the FHA loan program and the HomePath loan program are great options – but if it comes down to a situation where you have a choice between the two, most people seem to agree that the HomePath loan program saves them money.