Please note that Fannie Mae replaced the MyCommunityMortgage Program with the Home Ready Mortgage Program at the end of 2015 and is no longer offered. We provide the MyCommunityMortgage Program overview below for your reference.What is A My Community Mortgage? Has a down payment been a stumbling block to advancing your goals of purchasing a home, Fannie Mae may have the loan program for you. The My Community program was created by Fannie Mae with the intent to provide low rates, minimal risk-based price adjustments, and reduced mortgage insurance costs to home buyer who meet certain requirements. Homebuyers can purchase a house under Fannie Mae’s My Community Mortgage product with a 3% down payment if at least one co-borrower is a first-time buyer.
Low Rates Risk Based Price Adjustments
The program has a no loan-level-price adjustments. These on a conventional loan could lead to the borrower paying more due to the higher risk associated for the lender, however this is not the case with the My Community Mortgage program. A few LLPAs to consider are the following:
- FICO score, the good news is whether you have a 620 or 800 score, those who get approved get the same interest rate pricing.
- Property type- Fannie Mae will increase the cost of loan if the property is labeled as higher risk. Properties that are commonly high risk are condominiums, duplexes, triplexes, or fourplexes.
- Down payment, on a conventional loan Fannie Maw will adjust pricing based on the size of your down payment. For example if you have the ability to pay a larger down payment then the outcome would result in better pricing. With the My Community Mortgage you have access to the same rate regardless of your down payment.
- Subordinate Financing or Second Mortgages, this program does not have any additional charges is there’s a second mortgage.
Affordable Mortgage Insurance
A positive attribute of this loan program is that is has reduced mortgage insurance costs. On a traditional loan the insurance cost is determined by many factors, “coverage” requirements is one of those factors. With a My Community Mortgage, the coverage requirement from the lender is noticeably less, making way for a cheaper mortgage insurance costs. Listed below is a table comparing coverage for a traditional loan vs a My Community Mortgage.
|Less than 5% down
|PMI Coverage Amount for a regular Conventional Loan
|12% PMI Coverage
|25% PMI Coverage
|30% PMI Coverage
|35% PMI Coverage
|PMI Coverage Amount for a My Community Mortgage
|6% PMI Coverage
|12% PMI Coverage
|16% PMI Coverage
|18% PMI Coverage
Reduced Down Payments
One of the biggest draws of this program is the down payment requirements. This programs allows Down Payment Assistance to assist in a down payment that can provide as little as zero down on a new property. Now that conventional 3% down loans are a reality, buyers have a real alternative to FHA. While the FHA loan has its benefits, it comes with high upfront fees and permanent mortgage insurance. Three percent down loans with the following characteristics will be considered for approval:
- The mortgage is a fixed rate loan.
- The property is one-unit single family home, co-op, PUD, or condo.
- At least one buyer has not owned a home in the last three years.
- The property will be the owner’s primary residence.
- The loan amount is at or below $417,000
For those wishing to use a first time homebuyer program, there are several options. Both FHA and the Fannie Mae My Community Mortgage are some of the best options available. If you wish to know more information or take action on determining your eligibility, we would love to help. Please feel free to email or contact us at (303) 444-5251.