Freddie Mac Home Possible® Frequently Asked Questions
Do I need to verify all borrower’s income if the borrower does not need all of their income to qualify for a Home Possible® mortgage?
No, you need to verify only a borrower’s qualifying income. For example, if the borrower can qualify for the mortgage with their base pay and not their overtime income, you may use only the base pay to determine Home Possible eligibility.
Can a borrower qualify for a Home Possible mortgage if they own another property?
Yes, the occupying borrower may have an ownership interest in one additional financed residential property.
Do you have to be a first-time homebuyer to qualify for a Home Possible mortgage?
No. The Home Possible mortgage is available to all qualified borrowers whose income does not exceed 80% of the area median income (AMI).
Do all Home Possible borrowers need to occupy the home they are purchasing as their primary residence?
No. Non-occupying borrowers are permitted on one-unit properties that meet the LTV ratio requirements in the Guide. However, at least one borrower must occupy the property as their primary residence.
Note: Income from non-occupying borrowers is included in the AMI calculation.
If no borrower on a loan application has a credit score, are the borrowers eligible for a Home Possible mortgage?
Borrowers without a credit score can qualify for a Home Possible mortgage, provided the LTV/TLTV/HTLTV ratio for the mortgage does not exceed 95 percent. Sellers can qualify such borrowers in one of the following ways:
Through Loan Product Advisor®, if they meet requirements in Guide Section 5201.1: Credit assessment with Loan Product Advisor.
Through manual underwriting, if they meet the requirements in Guide Section 4501.8: Underwriting requirements for Home Possible Mortgages.
If a borrower is seeking a special purpose cash-out mortgage, such as in a divorce settlement, can that mortgage be delivered as a Home Possible mortgage?
No. A Home Possible mortgage cannot be a cash-out refinance mortgage. The only refinance mortgages that can be Home Possible mortgages are no cash-out refinance mortgages.
Q10. How do I to verify if a borrower can qualify for a Freddie Mac Home Possible® mortgage based on the property location and the borrowers’ qualifying income.
You can use the Home Possible Income and Property Eligibility Tool to verify if a borrower can qualify for a Freddie Mac Home Possible® mortgage based on the property location and the borrowers’ qualifying income. Enter a street address in the tool and a pop-up window will appear with the most accurate results available.
Can I give a gift or grant to assist with a borrower's down payment?
A gift or grant from a lender is allowed only after a minimum three percent contribution is made from borrower personal funds or other eligible sources of funds.
What are the acceptable sources of funds for the borrowers’ three percent down payment?
In addition to their own funds, a borrower can also receive assistance in reaching the minimum three percent contribution on a one-unit property from other sources. These include: a gift from a person meeting the Guide definition of a related person, funds from a governmental or non-governmental agency, Employer Assisted Homeownership (EAH) programs, and Affordable Seconds®. Contributing agencies must not be affiliated with the lender or the origination of the mortgage except in the case of an EAH. See Guide Section 4501.10 (c) for more information on sources of funds.
Can I use premium financing to fund the down payment?
No. Down payment assistance cannot be funded through the mortgage transaction in any way, including through points, price, fees, or any activity that might be described as premium financing.
Can I use premium financing to fund closing costs and prepaids?
Yes. You can use premium financing to assist a borrower with closing costs, financing costs, and prepaids/escrows.
Do all Home Possible borrowers need to take a homeownership education course?
No. Homeownership education is required only for a purchase mortgage when all borrowers are first-time homebuyers or if the credit reputation for all borrowers is established using only Noncredit Payment References. In both instances, at least one borrower must complete a homeownership education program for a purchase mortgage before the mortgage’s note date.
Is homeownership education required for a Home Possible refinance transaction?
No. Homeownership education is not required for Home Possible mortgages that are refinances.
How can the homeownership education requirement for first-time homebuyers be fulfilled?
You can meet this requirement with homebuyer education provided by HUD-approved counseling agencies, housing finance agencies (HFAs), community development financial institutions (CDFIs), mortgage insurance companies or other programs that meet National Industry Standards for Homeownership Education and Counseling. Borrowers may also choose to take our free homeownership education course CreditSmart® Homebuyer U.
If a borrower completed a HUD-approved homeownership education program to qualify for a competing loan offering, but has since decided to use a Home Possible mortgage, will that education program fulfill the Home Possible education requirement?