HomePath vs. HomeReady vs. FHA

By Dave McKean

Wednesday, May 1, 2019


Fannie Mae and Freddie Mac have a couple of low-income housing products that are really great and can help your buyers get in with a lower payment. Home Ready is the Fannie version and Home Possible is the Freddie version and they are truly great products. A lot of times we will put people into FHA loans because they have lower than a 720 credit score. This is due to the fact that conventional loans have big hits for rate and PMI for lower credit scores, and they also increase the PMI for lower scores too! Well, these programs don't do that, but they have some restrictions. Many areas are restricted to income limits of $64,300.00 but some areas are not restricted at all and you can make an unlimited amount of money and still qualify for the loan. Everything is done by tracts, but there are areas of Santa Monica, Van Nuys, North Hollywood, Burbank, Pasadena, Northridge, Reseda, Canyon Country, Newhall, Pacoima, Arleta, Glendale, many areas in Ventura including parts of Simi Valley and most of the Antelope Valley! This does not mean that HomePath and Home Ready are better than FHA. Even at a 660 score FHA has a better payment. See below: What does this mean for your clients? Well, let's say they are buying for $500,000.00 and they put down 5% with a 660 credit score. Here is what they would get: Straight Loan - 30 year fixed - 5.125% no Points - $2586.31 Principal and Interest / $520.83 Property Taxes / $90.00 Insurance /PMI $459.20 = $3656.34 Home Ready or Home Possible = 4.875% no Points - $2513.74 Principal and Interest / $520.83 Property Taxes / $90.00 Insurance /PMI $396.00 = $ 3520.57 FHA - 4.000% no Points - $2306.55 Principal and Interest / $520.83 Property Taxes / $90.00 Insurance /PMI $322.00 = $ 3239.39 A $200.00 Savings is not bad for a short course online and buying in the right census tracts! If you have questions give me a call to discuss your options. Mike Meena Augusta Financial 25129 The Old Road, Suite 350, Santa Clarita, CA 91381 Phone: 661-260-2970 Fax: 661-554-7121 Email - Mike@AugustaFinancial.com
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