Program Overview: Are you currently looking for a new house, or have you been frustrated with the process in the past? Freddie Mac Home Possible advantage mortgages offer outstanding flexibility and options to help meet your needs. With Home Possible, you’ll capitalize on opportunities to meet the home financing needs of low- and moderate-income borrowers looking for low down payments and flexible sources of funds. Freddie Mac Home Possible Advantage SM offers more flexibility for maximum financing. This offering adopts the responsible and affordable flexibility of Home Possible, but with additional requirements. Below are some of the key features of the Home Possible Advantage Mortgage.
| Feature | Home Possible | Home Possible Advantage |
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| Property Types |
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| Eligible Mortgage Products |
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| Maximum LTV/TLTV Ratios |
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| Eligibility/Underwriting | A Home Possible mortgage may be submitted to Loan Prospector® or may be a manually underwritten mortgage. See Guide Section A34.8 for credit underwriting requirements. | |
| Requirements for Minimum Borrower Contribution and Sources of funds | See Guide Section A34.10 for requirements on minimum contributions from borrower personal funds, reserves and permitted sources of funds. | |
| Homebuyer Education |
See Guide Section 34.12 for homeownership education and landlord education requirements related to:
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| Delivery Fees |
See Guide Exhibit 19 for:
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| Special Delivery Requirements | See Guide Section 17.18(b) for special delivery instructions for Home Possible mortgages. | |
| Single-Family Seller/Servicer Guide | Refer to Guide Chapter A34. | |
Key Features and Flexibility
- Fixed-rate mortgages with a term of up to 30 years.
- Eligible properties: one-unit properties, condominiums, and planned united developments. (Manufactured homes are ineligible.)
- All borrowers must occupy the property as their primary residence.
- Maximum loan-to-value (LTV) is 97% and maximum total loan-to-value (TLTV) is 105%.
- Reduced mortgage insurance coverage (18%).
- Temporary Subsidy Buydown plans lower initial monthly payments.
- No reserves required.
- More eligible sources of funds for down payment and closing costs.
- Eligible annual income up to 100% of Area Median Income or higher in select counties and no income limit in underserved areas.
- May be submitted through Loan Prospector® or manually underwritten
Benefits
The Freddie Mac Home Possible Advantage Mortgage offers a variety of benefits designed to make homeownership more accessible for low- and moderate-income first-time homebuyers. Here’s a detailed breakdown of some key advantages:
No Minimum Borrower Contribution:
Unlike some mortgage programs, Home Possible Advantage doesn’t require a minimum down payment from your own savings. This means you can potentially use all of your saved money for closing costs or unexpected moving expenses.
Gift Funds and Flexible Down Payment Sources:
This program allows gifts from family members, friends, or employer assistance programs to contribute towards your down payment and closing costs. Additionally, sweat equity from renovations you make yourself can also count towards the down payment, allowing you to Freddie mac interested party contributions your skills and reduce the upfront cash needed.
Lower Monthly Payments with Reduced Mortgage Insurance:
Home Possible Advantage offers reduced mortgage insurance coverage compared to traditional programs. This translates to lower monthly mortgage insurance premiums, which can significantly impact your overall monthly payment.
Lower Income Requirement:
Because of the reduced monthly payments due to lower mortgage insurance, you might qualify for a Home Possible Advantage Mortgage even with a slightly lower freddie mac rental income than what would be required for a conventional mortgage. This opens the door to homeownership for a wider range of income brackets.
No Minimum Loan-to-Value (LTV) Limit:
The LTV ratio compares your loan amount to the appraised value of the property. Traditionally, there might be a minimum LTV requirement, meaning you’d need a larger down payment. Home Possible Advantage eliminates this hurdle, allowing you to finance a higher percentage of the home’s value with the mortgage.
No Reserves Required:
Some mortgages require reserves, which are additional funds set aside to cover unexpected expenses during the first few months of homeownership. Home Possible Advantage eliminates this requirement, reducing the upfront cash needed to close on the house.
Flexible Closing Cost Funding Options:
This program allows for various ways to cover closing costs with Freddie mac home possible income limits. You can use gift funds from relatives, down payment assistance programs, or even roll the closing costs into the loan amount itself (increasing your overall home possible loans amount).
Home Possible Advantage or FHA?
Comparison of Home Possible Advantage with monthly PMI vs. FHA using $150,000 sales price.
| 30-year fixed rate mortgage scenario | Home Possible Advantage 18% Monthly MI Coverage 4.375% Note Rate**, 97% LTV FICO Ranges 680-719 / 720-759 |
FHA No FICO Cuts 3.750% Note Rate* 96.5% LTV |
| Base Loan Amount | $145,500 | $144,750 |
| Upfront MIP Rate (%) | 0 | 1.75% |
| Upfront MIP Cost ($) | 0 | $2,533 |
| Total Loan Amount | $145,500 | $147,283 |
| Down Payment | $4,500 | $5,250 |
| Monthly MI Rate (%) | .80%/ .60% | 0.85% |
| Monthly MI ($) | $97/$73 | $102 |
| Principal/ Interest | $726 | $682 |
| Total Monthly Payment | $823/$799 | $784 |
Next Steps
This program offers a great opportunity for many first-time homebuyers, but navigating the process can seem daunting. Here’s a roadmap to guide you on your journey:
Get Educated:
Homeownership Education Workshop: Knowledge is power, especially when it comes to buying your first home. Freddie Mac requires borrowers who are all first-time homebuyers to complete a Freddie mac home possible homebuyer education program. These workshops cover crucial topics like budgeting, understanding the mortgage process, and homeownership maintenance.
Find the Right Team:
Mortgage Lender: Having a qualified mortgage lender who specializes in Freddie Mac Home Possible Advantage Mortgages is essential. They can assess your financial situation, pre-approve you for a loan, and guide you through the entire application process. Look for lenders with a proven track record of helping first-time homebuyers and familiarity with Freddie Mac programs.
Real Estate Agent (Optional): While not mandatory, a real estate agent experienced with Home Possible Advantage Mortgages can be a valuable asset. They can help you find properties that meet your needs and budget, negotiate the purchase price, and ensure a smooth closing process. Look for a buyer’s agent who represents your interests and understands the specifics of this program.
Gather Your Documents:
Once you’re pre-approved for a loan, you’ll need to provide documentation to verify your Freddie mac future income, employment, assets, and debts. This typically includes pay stubs, tax returns, bank statements, and investment account statements.
House Hunting:
With your pre-approval letter in hand, you can confidently start searching for your dream home! Remember, the maximum loan-to-value ratio for this program is 97%, so factor in the down payment and closing costs when considering property prices.
Make an Offer:
Once you’ve found the perfect place, your real estate agent (if you have one) will help you craft a competitive offer. Keep in mind that with the lower down payment of this program, your offer might be more attractive to sellers who are open to freddie mac delayed financing options.
Close the Deal:
After your offer is accepted, you’ll work with your lender to finalize the loan and prepare for closing. This typically involves a home inspection, appraisal, and title search. Be sure to carefully review all closing documents before signing.
The Freddie Mac Home Possible advantage mortgage could be a great option. Call today to get more information and started on the loan process today!
