HomeReady Mortgage Program Questions!

3 Replies

Hello Bigger Pockets Lenders and Investors!

I wanted to see if anyone has experience with the new HomeReady mortgage program.

http://themortgagereports.com/18653/homeready-mortgage-guidelines-interest-rates/

In addition to hearing your general impression, I wanted to know if there was a map of areas in which one could use the HomeReady program.  

For example, the program is available in areas with high concentration of minorities. It is also available in "designated disaster areas" as determined by FEMA. Both of those qualifications could allow much of southern California to qualify. But it would be immensely helpful if there was a way to more specifically determine which areas would qualify, e.g. a map.

Any ideas from lenders or active investors in LA like  @Sharad M.  @Albert Bui  @Logan Drew  or others whom I'm unable to tag @jerrypadilla @joffreylong @billevans?

Thanks in advance.

RD

Originally posted by @RD Delgado :

Hello Bigger Pockets Lenders and Investors!

I wanted to see if anyone has experience with the new HomeReady mortgage program.

http://themortgagereports.com/18653/homeready-mortgage-guidelines-interest-rates/

In addition to hearing your general impression, I wanted to know if there was a map of areas in which one could use the HomeReady program.  

For example, the program is available in areas with high concentration of minorities. It is also available in "designated disaster areas" as determined by FEMA. Both of those qualifications could allow much of southern California to qualify. But it would be immensely helpful if there was a way to more specifically determine which areas would qualify, e.g. a map.

Any ideas from lenders or active investors in LA like  @Sharad M.  @Albert Bui @Logan Drew  or others whom I'm unable to tag @jerrypadilla @joffreylong @billevans?

Thanks in advance.

RD

 Its based on area median income (AMI), it depends on what the AMI is in that area and you can go up to a percentage of that AMI along with having to be a first time buyer and couple other items.

The only benefit is 2% lower down, 3% down instead of 5% down, and you can use room mate income to qualify really, and lower MI coverage requirements (aka cheaper MI options). 

The con's are a rate premium over standard conventional (about .375% to .50% higher) and the first time buyer requirement of no primary residence ownership/tax interest write within the last 3 years, and income thresholds. 

I just let my clients know the pro's and con's they usually pick regular conventional and we dont really venture down home ready or the other Fannie Freddie programs for 97% LTV financing. Most of the time we're over the income limits anyway, at least in my experience.

There are plenty of programs that have lower down even with 2-4 unit primary residences like Fannie Mae "My Community," but the problem is that while it is 5% down for 2-4 unit's I have not found any MI company who will insure the loan.

My Community or MCM program requires first time buyer (no primary residences within the last 3 years) and AMI income limits similar to home ready.

The easiest way to bridge that MI provider gap and have a "low down payment," program is to use FHA but, the downside is the upfront and monthly MI payments. There are some ways to structure the loan to reduce the MI hit and to create more effective returns as a "house hack," and or "live in investor."

If you also value add through forced, market, or found equity techniques then you may be able to obtain enough equity where you can do a conventional refinance later on and remove the monthly MI.

This is a good strategy but you'd have to buy correctly or lucky with the market appreciation in order to get that equity needed.