Freddie Mac’s Home Possible mortgage is a loan program designed for home buyers with low incomes or little in savings. It requires just a 3% down payment.

Who is eligible for a Home Possible loan?

Since the Home Possible loan is for low-income homebuyers only, your household income will need to fall under 80% of the area’s median to qualify. You can use Freddie Mac’s eligibility tool to see if your income meets this threshold in your area. (In rare cases, areas may have no income limit.)

Beyond the income limits, there are several other requirements you’ll need to meet to use a Home Possible mortgage. These include:

• You must have a credit score of at least 660 and funds for at least a 3% down payment. These can be funds from savings, a gift from family, or a loan or grant received through a down payment assistance program
• At least one borrower (either you or your co-borrower) must occupy the home you’re purchasing as your primary residence. Homes up to four-unit properties are eligible.
• Your monthly debt-to-income ratio must not exceed 43%. Your projected housing expenses — including your monthly mortgage payment, taxes, insurance, and interest — typically should not exceed 35%.

If you’re a first-time homebuyer or you have a limited credit history, you also may need to complete a homebuyer education course.

Freddie Mac Home Possible income limits

The income limits are strict on Home Possible loans, as these mortgages are meant specifically for lower-income Americans. To be eligible, your annual household income can’t be more than 80% of the median income for your area.

The median income in Lansing, Michigan, for example, is $79,100. Since 80% of that is $63,280, you would have to make less than this amount to be eligible for a Home Possible Loan.

Freddie Mac’s map tool can help you determine the area median income. It can also help connect you to valuable down payment assistance resources if needed.

Low down payment alternatives to Freddie Mac’s Home Possible loan program

The Home Possible loan isn’t the only mortgage option for low-income homebuyers — or those short on savings. In fact, there are several other mortgage programs that offer low down payments. In some cases, you might be able to avoid a down payment altogether.

If you’re looking for an affordable mortgage program, you might consider one of these options:

• FHA loans: These are loans guaranteed by the Federal Housing Administration. FHA loans require anywhere from 3.5% to 10% down (depending on your credit). They also allow for very low credit scores, especially compared to other loan programs. The minimum credit score goes down to 500 with select lenders.
• Conventional 97 loans: Conventional loans require a minimum 3% down payment. Mortgage insurance is also cancelable on these loans, which can allow you to reduce your monthly payment later down the line.
• Fannie Mae Home Ready loans: Home Ready loans are Fannie Mae’s version of Home Possible Mortgages. They require just a 3% down payment and come with reduced mortgage insurance costs. They also allow for credit scores as low as 620.
• VA home loans: These are loans guaranteed by the Department of Veterans Affairs and are available only to military members, veterans, and their spouses. They require zero down payment, come with low interest rates, and limit the closing costs borrowers can be charged by their lenders.
• USDA loans: USDA loans are backed by the Department of Agriculture, and they’re for use in more rural and, in many cases, suburban parts of the country. Like VA loans, they require no down payment. These loans do have some property eligibility requirements. To see if a home you’re considering is eligible for a USDA loan, check this eligibility map.

Down payment and closing cost assistance programs can also help lower the upfront costs of buying a home. These programs vary by location, so check with your state housing agency to see what you might be eligible for.

Eligible income sources for a Freddie Mac Home Possible loan

Freddie Mac is flexible in how your down payment and your income are sourced. Income can be from traditional W-2 earnings or contracted 1099 earnings (though you’ll need a tax transcript to document this). Keep in mind: The income of all borrowers on the loan will be considered, so if you bring in a co-borrower, their income will be factored in as well. The income cap is for the household’s total combined income.

If you plan to have someone rent a room or part of the property from you, you can also use your future rental income to qualify you for the loan. To do this, the renter cannot be on the mortgage, must have lived with you for at least one year, and cannot be your spouse or domestic partner. You’ll also need to provide documentation of paid rent for the last 12 months.

As for down payments, borrowers can use a variety of sources of funds, including cash, gifts from family, employer assistance programs, down payment assistance loans, and even sweat equity, which is when you physically improve the house and increase its value (in place of an actual down payment).

Freddie Mac Home Possible FAQ

What is Freddie Mac Home Possible?

Home Possible is a mortgage loan program sponsored by Freddie Mac. The loan is designed for low-income borrowers and first-time homebuyers with very little savings. Qualifying buyers need just a 3% down payment to use the loan.

Does Freddie Mac Home Possible allow boarder income?

Yes, you can use boarder income — or the future income you expect from a renter in the home — to qualify for a Home Possible loan. There are specific rules regarding this, and the renter must have lived with you for at least a year prior to your purchase of the home. They also cannot be your spouse or domestic partner, and you will need to provide documentation of paid rent for the past 12 months.

How do I apply for Freddie Mac’s Home Possible Advantage?

To apply for a Freddie Mac Home Possible mortgage, you’ll need to find a mortgage lender that offers conventional loans, and then fill out their application. You will also need to agree to a credit check and provide various forms of financial documentation (your lender will let you know exactly which ones).

The majority of large banks, credit unions, and lenders offer conventional loans, including Home Possible mortgages, but make sure you shop around for yours. Interest rates can vary widely from one to the next. Getting quotes from a few different companies can ensure you get the most affordable mortgage payment possible.

Is Freddie Mac Home Possible for first-time homebuyers?

First-time homebuyers can definitely use the Freddie Mac Home Possible loan, as long as they meet the program’s income requirements. To qualify, your household must make 80% or less than the area median household income. Freddie Mac has an eligibility tool you can use to determine this threshold in your area.

If you do plan to use the Home Possible loan as a first-time buyer, you’ll need to complete a homeownership education course first. Freddie Mac requires this if all borrowers on the loan will be first-time homebuyers.

What is a Freddie Mac Home Possible loan?

A Freddie Mac Home Possible loan is a mortgage for homebuyers with low incomes or little in savings. It allows for a 3% down payment, and mortgage insurance is cancelable once you have at least 20% equity in the home.

Is home possible a Fannie or Freddie loan program?

Home Possible is a Freddie Mac loan program. Fannie Mae does have a similar loan product, though, called the Home Ready mortgage program. It requires just a 3% down payment (like the Home Possible loan,) but does not have an income limit. It also allows for slightly lower credit scores.

How do I qualify for a Freddie Mac home loan?

To qualify for a Home Possible mortgage, you’ll need a household income that’s equal to or less than 80% of the area’s median. You’ll also need at least a 660 credit score and a 43% or lower debt-to-income ratio. For other Freddie Mac loan programs, the requirements vary. Your mortgage lender or loan officer can advise you on which programs you might be eligible for, as well as the exact requirements you’ll need to meet to qualify.

What is the max DTI for Home Possible?

With a Home Possible loan, your debt-to-income ratio, or how much of your monthly income your debt payments take up, can’t exceed 43%. That means at maximum, your debt payments (minimum credit card payments, car loan payments, etc.) can’t take up more than 43% of your monthly earnings.

When did Freddie Mac’s Home Possible income limits change?

Freddie Mac tightened its income limits on the Home Possible mortgage loan program in July of 2019 in an effort to focus more on in-need, low-income homebuyers. If you exceed the new income threshold on the Freddie Mac Home Possible loan, Fannie Mae’s Home Ready loan may be a better option. This program does not have an income limit and allows for lower credit scores.

I’m ready to apply for the Freddie Mac Home Possible 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.

Freddie Mac’s Home Possible mortgage is a loan program designed for home buyers with low incomes or little in savings. It requires just a 3% down payment.

Who is eligible for a Home Possible loan?

Since the Home Possible loan is for low-income homebuyers only, your household income will need to fall under 80% of the area’s median to qualify. You can use Freddie Mac’s eligibility tool to see if your income meets this threshold in your area. (In rare cases, areas may have no income limit.)

Beyond the income limits, there are several other requirements you’ll need to meet to use a Home Possible mortgage. These include:

• You must have a credit score of at least 660 and funds for at least a 3% down payment. These can be funds from savings, a gift from family, or a loan or grant received through a down payment assistance program
• At least one borrower (either you or your co-borrower) must occupy the home you’re purchasing as your primary residence. Homes up to four-unit properties are eligible.
• Your monthly debt-to-income ratio must not exceed 43%. Your projected housing expenses — including your monthly mortgage payment, taxes, insurance, and interest — typically should not exceed 35%.

If you’re a first-time homebuyer or you have a limited credit history, you also may need to complete a homebuyer education course.

Freddie Mac Home Possible income limits

The income limits are strict on Home Possible loans, as these mortgages are meant specifically for lower-income Americans. To be eligible, your annual household income can’t be more than 80% of the median income for your area.

The median income in Lansing, Michigan, for example, is $79,100. Since 80% of that is $63,280, you would have to make less than this amount to be eligible for a Home Possible Loan.

Freddie Mac’s map tool can help you determine the area median income. It can also help connect you to valuable down payment assistance resources if needed.

Low down payment alternatives to Freddie Mac’s Home Possible loan program

The Home Possible loan isn’t the only mortgage option for low-income homebuyers — or those short on savings. In fact, there are several other mortgage programs that offer low down payments. In some cases, you might be able to avoid a down payment altogether.

If you’re looking for an affordable mortgage program, you might consider one of these options:

• FHA loans: These are loans guaranteed by the Federal Housing Administration. FHA loans require anywhere from 3.5% to 10% down (depending on your credit). They also allow for very low credit scores, especially compared to other loan programs. The minimum credit score goes down to 500 with select lenders.
• Conventional 97 loans: Conventional loans require a minimum 3% down payment. Mortgage insurance is also cancelable on these loans, which can allow you to reduce your monthly payment later down the line.
• Fannie Mae Home Ready loans: Home Ready loans are Fannie Mae’s version of Home Possible Mortgages. They require just a 3% down payment and come with reduced mortgage insurance costs. They also allow for credit scores as low as 620.
• VA home loans: These are loans guaranteed by the Department of Veterans Affairs and are available only to military members, veterans, and their spouses. They require zero down payment, come with low interest rates, and limit the closing costs borrowers can be charged by their lenders.
• USDA loans: USDA loans are backed by the Department of Agriculture, and they’re for use in more rural and, in many cases, suburban parts of the country. Like VA loans, they require no down payment. These loans do have some property eligibility requirements. To see if a home you’re considering is eligible for a USDA loan, check this eligibility map.

Down payment and closing cost assistance programs can also help lower the upfront costs of buying a home. These programs vary by location, so check with your state housing agency to see what you might be eligible for.

Eligible income sources for a Freddie Mac Home Possible loan

Freddie Mac is flexible in how your down payment and your income are sourced. Income can be from traditional W-2 earnings or contracted 1099 earnings (though you’ll need a tax transcript to document this). Keep in mind: The income of all borrowers on the loan will be considered, so if you bring in a co-borrower, their income will be factored in as well. The income cap is for the household’s total combined income.

If you plan to have someone rent a room or part of the property from you, you can also use your future rental income to qualify you for the loan. To do this, the renter cannot be on the mortgage, must have lived with you for at least one year, and cannot be your spouse or domestic partner. You’ll also need to provide documentation of paid rent for the last 12 months.

As for down payments, borrowers can use a variety of sources of funds, including cash, gifts from family, employer assistance programs, down payment assistance loans, and even sweat equity, which is when you physically improve the house and increase its value (in place of an actual down payment).

Freddie Mac Home Possible FAQ

What is Freddie Mac Home Possible?

Home Possible is a mortgage loan program sponsored by Freddie Mac. The loan is designed for low-income borrowers and first-time homebuyers with very little savings. Qualifying buyers need just a 3% down payment to use the loan.

Does Freddie Mac Home Possible allow boarder income?

Yes, you can use boarder income — or the future income you expect from a renter in the home — to qualify for a Home Possible loan. There are specific rules regarding this, and the renter must have lived with you for at least a year prior to your purchase of the home. They also cannot be your spouse or domestic partner, and you will need to provide documentation of paid rent for the past 12 months.

How do I apply for Freddie Mac’s Home Possible Advantage?

To apply for a Freddie Mac Home Possible mortgage, you’ll need to find a mortgage lender that offers conventional loans, and then fill out their application. You will also need to agree to a credit check and provide various forms of financial documentation (your lender will let you know exactly which ones).

The majority of large banks, credit unions, and lenders offer conventional loans, including Home Possible mortgages, but make sure you shop around for yours. Interest rates can vary widely from one to the next. Getting quotes from a few different companies can ensure you get the most affordable mortgage payment possible.

Is Freddie Mac Home Possible for first-time homebuyers?

First-time homebuyers can definitely use the Freddie Mac Home Possible loan, as long as they meet the program’s income requirements. To qualify, your household must make 80% or less than the area median household income. Freddie Mac has an eligibility tool you can use to determine this threshold in your area.

If you do plan to use the Home Possible loan as a first-time buyer, you’ll need to complete a homeownership education course first. Freddie Mac requires this if all borrowers on the loan will be first-time homebuyers.

What is a Freddie Mac Home Possible loan?

A Freddie Mac Home Possible loan is a mortgage for homebuyers with low incomes or little in savings. It allows for a 3% down payment, and mortgage insurance is cancelable once you have at least 20% equity in the home.

Is home possible a Fannie or Freddie loan program?

Home Possible is a Freddie Mac loan program. Fannie Mae does have a similar loan product, though, called the Home Ready mortgage program. It requires just a 3% down payment (like the Home Possible loan,) but does not have an income limit. It also allows for slightly lower credit scores.

How do I qualify for a Freddie Mac home loan?

To qualify for a Home Possible mortgage, you’ll need a household income that’s equal to or less than 80% of the area’s median. You’ll also need at least a 660 credit score and a 43% or lower debt-to-income ratio. For other Freddie Mac loan programs, the requirements vary. Your mortgage lender or loan officer can advise you on which programs you might be eligible for, as well as the exact requirements you’ll need to meet to qualify.

What is the max DTI for Home Possible?

With a Home Possible loan, your debt-to-income ratio, or how much of your monthly income your debt payments take up, can’t exceed 43%. That means at maximum, your debt payments (minimum credit card payments, car loan payments, etc.) can’t take up more than 43% of your monthly earnings.

When did Freddie Mac’s Home Possible income limits change?

Freddie Mac tightened its income limits on the Home Possible mortgage loan program in July of 2019 in an effort to focus more on in-need, low-income homebuyers. If you exceed the new income threshold on the Freddie Mac Home Possible loan, Fannie Mae’s Home Ready loan may be a better option. This program does not have an income limit and allows for lower credit scores.

I’m ready to apply for the Freddie Mac Home Possible 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.