HomeReady/Home Possible opportunities coming to an end.
HomeReady and Home Possible are a pair of loan programs with slightly reduced interest rates, and Home Possible is notable for it's use in "house hacking" since you can do 95% LTV on a 2-4 unit property and get a better deal than FHA. It's supposed to be for "moderate income" and a way to check Community Reinvestment Act boxes. Either the borrower or the census tract must be low/moderate income, or both. It turns out that I'm not the only one that has always exploited this to put white collar six figure professionals into their home using "moderate to low income" goodies: 3/4/19 Most CRA-qualifying loans in low- and moderate-income areas go to middle- and upper-income borrowers.
It's great. Census tract has no income limit? Great! I check a box and have the homebuyer do an online FTHB course, and poof the rate is 0.25% or so lower, and the PMI often gets cheaper too. What's not to love?
Unfortunately, it appears that Fannie Mae has taken notice. 6/5/19 - Upcoming HomeReady Updates.
Currently, to be eligible for a HomeReady loan, the borrowers' total annual qualifying income may not exceed 100% of the area median income (AMI) for the property's location. There is no income limit for properties located in low-income census tracts (census tracts where hte median income is not greater than 80% AMI) [Note from OP: this comprises like 70%-80% of cities such as Oakland, Vallejo, Richmond CA, and Stockton]. To better align with our housing goals, we are changing the income limit requirements for all HomeReady loans to not exceed 80% AMI for the property's location (This includes properties in low-income census tracts.)
This comes into effect for purchase transactions or refinances started on or after July 20th, 2019. No word from Freddie Mac yet, but they tend to follow Fannie Mae. I'd guess there's at most six months left on using Home Possible to house hack a 2-4 unit property and get better financing than FHA. If you're on the fence, it's now or never.
