HomeReady Mortgage | Requirements & Income Limits for 2026

Fannie Mae aims to make home buying easier through its HomeReady mortgage program.

Here are a few highlights of the program:

• As little as 3% down payment
• Lower private mortgage insurance costs
• Down payment sources include gifts, cash-on-hand, and down payment assistance programs.
• Use income from non-occupant co-borrowers to qualify
• Your income must be at or below 80% of the area median income for the home’s location.
• “Boarder income” (income from a roommate) helps you qualify.
• Use rental income from a basement apartment or mother-in-law unit.

Click here to see if you qualify to buy a home with the HomeReady Mortgage (Nov 10th, 2026)

Is a HomeReady mortgage only for first-time homebuyers?

HomeReady is Fannie Mae’s mortgage for low- to moderate-income buyers. It helps first-time home buyers and repeat buyers alike.

The program is built for households with flexible needs, such as Millennials, multigenerational families, and buyers who share a home. Eligibility depends on your income and the home’s location.

This program goes way beyond the flexibility of most other loan types, even ones considered ultra-flexible like FHA.

Click here to see if you qualify to buy a home with the HomeReady Mortgage (Nov 10th, 2026)

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In this article:

• Flexible down payments
• Income sources
• Income limits
• Credit score minimums
• Mortgage insurance costs
• Our recommended lenders for home loans

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HomeReady is flexible on down payments

Down payments have been one of the toughest parts of breaking into homeownership.

For many renters, saving for a down payment is one of the biggest obstacles to owning a home.

Fannie Mae has its sights aimed right at that issue.

Sourcing a down payment for your HomeReady Mortgage

The HomeReady Mortgage requires as little as 3% down on a one-unit home. But more importantly, the source of that 3% is very flexible.

Some mortgage programs, such as loans on two- to four-unit homes, require what’s called a “minimum contribution” from the borrower. This is the amount home buyers must come up with on their own. Only after they have met the minimum contribution can they receive help from a gift or down payment assistance program.

Not so with HomeReady on a one-unit home. One hundred percent of the down payment can come from a down payment gift. A parent or other relative can fund the entire amount of the down payment and closing costs.

The buyer can also receive a grant from an approved down payment assistance source. Many cities and states around the country offer down payment assistance programs that cover up to 100% of the required down payment.

Cash-on-hand down payments

But the real groundbreaking feature is the ability to use cash-on-hand. Many people save cash in a safe place at home rather than in a traditional savings account.

Most mortgage programs require an applicant to open a bank account, deposit their cash and wait 60 days. After two months, the borrower can submit bank statements that do not show an unexplained bank deposit.

HomeReady allows cash-on-hand for the down payment and closing costs on a one-unit home. It cannot be used for reserves. This option is for buyers who usually pay for things in cash and who use little or no credit and have little or no banking history. The lender must confirm that the cash matches your past habits. The cash must be in a bank account when you apply, or at least 30 days before closing. You must also sign a statement that the money was not borrowed.

Many income sources can help you qualify

Another HomeReady flexibility is regarding income.

Regular income

HomeReady is exactly like other mortgage programs in that borrowers can use employment income, commission, bonus, and even tip income to qualify.

Household Income

Income from household members who will not be on the loan does not count toward your qualifying income.

This matters for multiple families living in one home, parents living with children, or unmarried couples where only one person wishes to be on the loan. If you need the other person’s income to qualify, they would need to join the loan as a borrower.

Fannie Mae’s current Selling Guide does not list household income as a compensating factor for HomeReady either. The ways to bring in extra income are a co-borrower, boarder income, and rental income from an accessory unit. Each is described below.

A debt-to-income ratio (DTI) above 45% can still be approved. Fannie Mae’s automated underwriting system allows a DTI of up to 50%.

Debt-to-income ratio is determined by two factors: 1) the amount of the future house payment plus all other required monthly debt payments, and; 2) gross income.

For instance, someone making $4,000 per month and $2,000 in housing, credit card, and student loan debt payments would have a 50% debt-to-income ratio.

That ratio is right at the limit. Fannie Mae’s automated underwriting system allows a DTI of up to 50%, and HomeReady has no separate cap. A loan that is underwritten by hand has a lower cap. Whether the loan is approved depends on your credit, your cash reserves and other factors.

Every situation is different, so check with a lender to see if you qualify for this program.

Click here to check your HomeReady eligibility (Nov 10th, 2026)

Co-signer income

This program allows income from non-occupant co-borrowers. This is the term used for co-signers of the loan who will not live in the home.

For instance, parents who already own a home can co-sign their child’s mortgage loan. The lender will use their income along with the main borrower’s income for qualification.

Boarder/roommate income

In addition, the home buyer can use “boarder” income to qualify. A boarder is basically a roommate or someone renting space in your household. To use the income you must document a shared living situation for the previous 12 months. You must also document rent paid directly to you for the 12 months, or for at least 9 of the last 12 months. Boarder income can be no more than 30% of the income used to qualify, and the home must be a one-unit property.

This feature makes homeownership much more feasible. Be sure to confirm your roommate will move into your new home with you. If so, they will be helping you qualify and pay for your mortgage!

Click here to apply for the HomeReady Mortgage program now (Nov 10th, 2026)

Mother-in-law units/Accessory Dwelling Units (ADUs) Rental Income

If the home you plan to purchase has a basement apartment, mother-in-law unit above the garage, or another accessory unit, you could use rental income to qualify.

Even if you do not currently have a roommate, you can find a renter for the additional unit in the new home and use the proposed income to qualify. Unlike boarder/roommate income, you do not have to have 12 months history of shared residency.

Landlord experience still matters. With less than 12 months of experience managing a rental, the ADU rent can only offset your mortgage payment. With 12 months or more, it can count as added income. Either way, ADU rent can be no more than 30% of the income you use to qualify, and you must have a current housing payment, such as rent. Keep in mind that the home must be classified as a 1-unit home with an ADU, not a 2-unit home. Using rental income is still possible when buying a 2-4 unit home, and the same experience rules apply.

Income limits for the HomeReady Mortgage

Income limits for the HomeReady program are intended to ensure that the program is reserved for applicants who need it most.

What is the HomeReady income limit?

Your total qualifying income cannot be more than 80% of the area median income (AMI) where the home is located. This limit applies in every area, including low-income census tracts. The limit counts the income of every borrower on the loan.

For instance, if the median income in the area is $100,000, the most a buyer can make and still use HomeReady is 80% of that, or $80,000. Median income varies by county, so check the property’s address in Fannie Mae’s lookup tool or ask your lender.

If you make more than the limit, you cannot use HomeReady for that home. The limit depends on where the property is, so a home in a different area may have a higher limit. You can also compare other low-down-payment loans, such as an FHA loan.

Fannie Mae offers an online Area Median Income lookup tool that shows the limit for a property address. Be sure to check the address of the home you want to buy and your income with your lender.

Click here to see if your income is within HomeReady limits (Nov 10th, 2026)

Credit score minimums for a HomeReady mortgage

Applicants don’t need perfect credit to qualify.

Fannie Mae no longer sets a minimum credit score for loans that its Desktop Underwriter system approves. A loan that is underwritten by hand needs at least a 620 score, with an exception for borrowers who have a thin credit file. Lenders and mortgage insurers often set their own minimums, and many still ask for 620.

A higher credit score still lowers your mortgage insurance cost. Fannie Mae waives its loan-level price adjustments on HomeReady loans, so HomeReady often prices better than a standard loan with the same down payment and credit score. Ask your lender to compare the two.

Be aware that lenders often impose “overlays” — tighter standards than Fannie Mae itself mandates. If your lender requires higher credit scores than those mentioned above, shop around to find a more lenient mortgage provider.

Lower mortgage insurance costs with the HomeReady program

On a 30-year fixed-rate loan with less than 10% down, Fannie Mae’s standard mortgage insurance coverage is 25% for HomeReady. A standard loan calls for 30% to 35%. Less required coverage can mean a lower monthly premium.

Your PMI cost depends on your credit score, your down payment and the mortgage insurance company. Ask your lender for a quote on a HomeReady loan and on a standard loan, and compare the monthly payments.

Home buyer education for a HomeReady mortgage

If all of the buyers who will live in the home are first-time home buyers, at least one of them must complete home buyer education before closing. Repeat buyers usually do not need the course, unless no borrower has a credit or installment account on a credit report. Fannie Mae offers an online course called HomeView that you can take at your own pace. Counseling from a HUD-approved agency also meets the requirement.

HomeView is free. Other approved courses may charge a fee. Counseling from a HUD-approved agency within 12 months of closing may also earn a pricing credit.

New homeowners benefit greatly from pre-purchase education. It’s hard to know all the ins and outs of homeownership by researching on your own. Going through formal training is a great idea for first-time home buyers whether or not they use the HomeReady program.

Why did Fannie Mae create HomeReady?

Fannie Mae formed an Economic and Strategic Research group. What did this group find? New homeownership is being driven by an ever-increasing number of diverse groups.

For instance, Millennial home buyers are moving from renting to buying in more numbers. Straddled with student loans, many have had no luck saving for a down payment.

First- and second-generation immigrants to the United States often pool their resources together to buy a home. Two families could live under the same roof. A group of single people might buy a home together to defray high housing costs.

Finally, the U.S. population is aging. Parents are moving in with their children. In 2021, about 59.7 million people lived in multigenerational households. That is 18% of the U.S. population, up from 7% in 1971.

Adult children will need to buy bigger homes as they plan to house aging parents long-term. With HomeReady, parents can join the loan as co-borrowers, so their income can help the family qualify for a bigger home. Their income also counts toward the program’s income limit.

I’m ready to apply for the HomeReady Mortgage Program

It’s a great time to see if you qualify. Checking your eligibility is a great way to start your homeownership journey.

Families and individuals will find the program much easier to qualify for than other programs. It could even be a great loan to compare if you’re also shopping for an FHA loan.

The program works for first-time and repeat home buyers. Check your eligibility now and get a free rate quote.

Click here to check your HomeReady eligibility (Nov 10th, 2026)