There are many reasons for buyers to look at a Fannie Mae HomePath purchase in this market. For example, on a HomePath purchase there is only a 5% down payment requirement for buyers who purchase the property as their primary residence, only 15% for investment properties, there is no appraisal required and there is no mortgage insurance on any of their loans. Here is what you need to know to qualify for a Homepath purchase and Homepath financing.
What is HomePath and what are the benefits to buyers
Fannie Mae at the end of last year had over 100k foreclosed properties on its books, these are all listed under HomePath, Fannie Mae’s REO division. HomePath allows a borrower to purchase these properties with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Here are the main benefits for a HomePath buyer.
- Low down payment and flexible mortgage terms (fixed–rate, adjustable rate).
- Down payment (at least 5%) can be funded by the borrower’s own savings; or a gift.
- No appraisal required.
- No mortgage insurance.
- Only 15% down payment for investment properties.
- Only 660 credit scores required.
- Many condo project requirements are waived (*if complex has less than 51% owner occupied ratios for example).
Comparing a HomePath Purchase vs FHA for buyers
Check out this Homepath vs FHA $300k purchase scenario below that shows the benefits for the HomePath buyer over the FHA buyer. On the left column we have the FHA buyer who has to put down a minimum down payment of 3.5%, vs the HomePath buyer on the right who only has to put down 3%.
As you can see above, even though the FHA buyer has a lower interest rate, the HomePath buyer has an overall lower monthly payment and will save an extra $257 a month because there is NO mortgage insurance (MI) on their loan. Also, as the HomePath buyer is getting their closing costs paid for by Fannie Mae (see incentive above) their total cash to close is just $9k, vs the cash to close of $20,895 due from the FHA buyer if they don’t get their closing costs paid for.
Also, the longer term savings are also significant for the HomePath buyer. See below, over the next 10 years on this particular scenario, the HomePath buyer will save $33,544 vs the FHA buyer.
We are an approved HomePath Lender
We are an approved Homepath lender and we have been helping many buyers qualify for the HomePath loan program. If you have any HomePath questions or you would like to get approved for financing, please feel free to contact me directly at 858-200-9602. I look forward to chatting soon.