Home Possible - Low Down Payments
Getting Into a Home Just Got Easier or No Cash Out Refis
Freddie Mac Home Possible Advantage(SM) Mortgage Makes Home Financing With a 3 Percent Down payment Possible!
Who is Freddie Mac?
Freddie Mac was established by Congress in 1970 to provide stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home ownership possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing.
Freddie Mac makes home ownership and rental housing more accessible and affordable. Operating in the secondary mortgage market, we keep mortgage capital flowing by purchasing mortgage loans from lenders so they in turn can provide more loans to qualified borrowers. Our mission to provide liquidity, stability, and affordability to the U.S. housing market in all economic conditions extends to all communities from coast to coast.
Freddie Mac launched Home Possible Advantage(SM), an affordable conforming, conventional mortgage with a three percent down payment requirement designed to make responsible home ownership accessible to more first-time buyers and other qualified borrowers with limited down payment savings.
"Home Possible Advantage gives qualified borrowers with limited down payment savings a responsible path to home ownership and lenders a new tool for reaching eligible working families ready to own a home of their own. Home Possible Advantage is Freddie Mac's newest effort to foster a strong and stable mortgage market." Freddie Dave Lowman, Executive Vice President, Single-Family Business at Freddie Mac.
Key Facts:
- Home Possible Advantage offers qualified low- and moderate-income borrowers a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent.
- Home Possible Advantage mortgages can be used to buy a single unit property or for a "no cash out" refinance of an existing mortgage.
- First time home buyers must participate in an acceptable borrower education program, like Freddie Mac's CreditSmart®, to qualify for Home Possible Advantage.
- Home Possible Advantage mortgages are available as 15-, 20-, and 30-year fixed rate mortgages.
What is a 203k Loan?
203k Loans Explained
As defined by Section 203(k) of Housing and Urban Development’s code, the 203(k) loan allows the home buyer to borrow enough funds to cover both the cost of the home and the price of repairs, including the cost of labor and material for those repairs, in one loan. Certain 203(k) loans may also be expanded to include funding for up to six months of mortgage payments.
The FHA does not directly lend these funds, but rather provides financial protection to lenders that do. The 203(k) loan can either be a 15- or 30-year fixed rate mortgage or adjustable rate mortgage (ARM). The amount the homeowner can borrow depends on qualifications like his/her credit and income, and the lender will also assess a down payment based on the total amount.
With the 203(k) loan, the maximum loan amount that can be borrowed is capped at 110 percent of the home’s projected value as determined by an appraiser. Additionally, lenders require the borrower to pay mortgage insurance.
Interest rates could be slightly higher than those associated with a conventional mortgage. However, they might be significantly lower than interest rates on loans taken out to cover repairs. There are two types of 203(k) loans available:
Limited 203(k): This loan is intended for smaller renovation and upgrade projects that are valued less than $35,000. There is no minimum cost requirement, although you can’t fund structural repairs with a Limited 203(k).
Standard 203(k): The Standard 203(k) loan is intended for more extensive repairs with a total price tag greater than $35,000.
The minimal loan amount for this type is $5,000. Structural changes, like additions or full home renovations, are permitted. The home buyer must obtain architectural exhibits and meet building codes.
The homebuyer must meet specific borrowing criteria from FHA. This includes a debt to income ratio of 31 percent for the monthly housing payment and not more than 43 percent with all debt combined. Buyers must have a credit score of at least 620to qualify. Additionally, the buyer will still need to make a down payment of at least 3.5 percent of the total amount borrowed. NOTE: This loan is only available to people who will live in the home, although under certain situations, nonprofit organizations can also take out a 203(k) loan.
What kinds of renovations does the 203(k) loan cover?
The 203(k) loans cover just about any expense the homeowner can think of, with the exception of certain luxury items. Those renovations include:
- Remodeling, adding, or expanding rooms, such as bathrooms, bedrooms, kitchens, and garages
- Replacing portions of the home, such as roofs or carpets
- Adding a second story, a basement, a patio or deck, or renovating a swimming pool
- Installing a septic system and upgrading plumbing
- Upgrading electric wiring and heating
- Installing energy-efficient appliances, including air conditioners or special windows and doors
Fix-It Mortgage by Advisors Mortgage
- RENOVATION LOANS can help you buy a home that is discounted because of its age or condition. FIX-IT MORTGAGE is a proprietary name of the Advisors Mortgage renovation loan that gives you the opportunity to add the costs of repairs or renovations into your mortgage. If you are looking at foreclosures, fixer uppers, handyman specials or other discounted properties that may be listed as “cash only” or “as-is”, this may be the right renovation loan solution for you. If you are looking at homes in older neighborhoods that may need updating, improvements or remodeling, there are multiple renovation loan solutions available.
- The FIX-IT MORTGAGE team of Renovation Loan Experts with Advisors Mortgage have years of experience to help you make the right product decisions. Using an expert in renovation lending will help you through the renovation loan process to successfully close as-is and on time. These renovation loan experts have combined experience of 125 years of success closing as-is and also on time. FIX-IT MORTGAGE, whether FHA 203(k) or Fannie Mae HomeStyle, could be your chance to find an affordable home ownership opportunity. They want to help you get there. (Fix-It is a trademark of Advisors Mortgage therefore proprietary.)
- The FHA 203(k) is the foundation of renovation lending. Originally 203(k) was written in the early sixties and then updated in the nineties. 203(k) has been the most popular choice in the market for buyers choosing a renovation loan in order to finance both the purchase and renovation costs necessary to close as-is. The down payment on these loans can be as little as 3.5%. At closing, the seller is paid, and the renovation funds go into an escrow account that is set up in the homeowner's name to fund the renovation costs through a system of inspections and draw requests.
