The HomeOne mortgage offers 3% down without the restrictions found in many other low down payment first time buyer programs.
HomeOne® loans for first-time homebuyers
Not the Freddie Mac HomeOne mortgage.
You have access to 3% down without income or geographic restrictions.
Ready to see if you qualify for HomeOne? Then let's go.
What's in this Article?
What is a HomeOne mortgage?
A HomeOne mortgage is a 3% down payment first-time homebuyer program created by mortgage agency Freddie Mac. It's meant to get more buyers into homes by removing some of the restrictions of other low down payment mortgages.
The 3% down requirement -- needing only $3,000 down for each $100,000 in loan amount -- is perfect for those with higher incomes but little down payment savings.
If you've been locked out of homeownership because most low down payment loans come with income restrictions, HomeOne could be your answer.
HomeOne quick guide
|Loan Attribute||HomeOne Requirement|
|Down payment||3%-4.99% (5%+ will be underwritten using standard Freddie Mac rules)|
|Credit||620+ and at least one borrower must have a usable score|
|First-time homebuyer||At least one borrower must be a first-time homebuyer|
|Homebuyer education||Required. Free course provided by Freddie Mac|
|Maximum loan amount||[loan_limit agency='fhfa' units='1' year='2022' type='standard']. Higher area loan limits are not allowed unless making a 5% down payment|
|Debt-to-income ratio||As determined by Freddie Mac's underwriting system. Typical maximum is 43-45%.|
|Property types||Single-family residences, PUDs and condos. No 2-4 unit properties or manufactured homes|
|Occupancy||All borrowers must plan to live in the home|
First-time homebuyer & education requirement
At least one buyer on the loan must be a first-time homebuyer, defined as someone who has not owned a home in the past three years.
And, if all buyers are first-time buyers, at least one of them must complete homeownership education. Fortunately, Freddie Mac offers a free course called CreditSmart® Homebuyer U that can be done at your own pace. At the end of the course, you get a certificate that verifies you've completed the necessary education requirement.
No HomeOne income limits
Other low down payment conventional programs such as HomeReady and Home Possible require borrowers to make less than 80% of their area's median income.
So if your area's median income is $100,000, you can make no more than $80,000 per year to qualify for those programs.
HomeOne eliminates this requirement so that you can make any amount of money and still qualify. Additionally, there are no geographic restrictions as with the USDA loan.
Maximum loan amount
The maximum loan amount for this program is [loan_limit agency='fhfa' units='1' year='2022' type='standard'] in [loan_year]. It does not allow high-balance loan amounts (up to [loan_limit agency='fhfa' units='1' year='2022' type='high-cost'] in some areas). However, putting 5% down may qualify you for these higher loan limits.
Loan-to-value or LTV is another way of expressing the down payment. A 3% down loan has an LTV of 97%.
This loan has a maximum LTV of 97%, but it also has a minimum LTV, which is 95.01%. The lender will review loans at 95% LTV (5% down) based on Freddie Mac's standard home purchase program.
But this could be to your advantage if you're looking to buy a manufactured home, 2-4 unit property, or otherwise don't fit into the HomeOne guidelines.
Single family homes, Planned Unit Development homes or condos only. No 2-4 unit properties or manufactured homes are allowed.
Fixed rate loans only. No adjustable-rate mortgages. Second mortgages are allowed provided the total of all loans isn't more than 97% of the purchase price. However, Affordable Seconds (down payment assistance loans from some sources) can go up to 105% of the home's price.
You need a 620 credit score to qualify for HomeOne. At least one borrower must have a satisfactory credit score.
Mortgage insurance is required but may be canceled when you reach approximately 20% equity in the home.
HomeOne vs Home Possible vs HomeReady vs FHA
|Loan attribute||HomeOne||Home Possible||HomeReady||FHA|
|First time homebuyers only||Yes||No||No||No|
|Income limit||None||80% of area median income||80% of area median income||None|
|1-unit Loan limit||[loan_limit agency='fhfa' units='1' year='2022' type='standard']||[loan_limit agency='fhfa' units='1' year='2022' type='high-cost']||[loan_limit agency='fhfa' units='1' year='2022' type='high-cost']||[loan_limit agency='fha' units='1' year='2022' type='high-cost']|
|Use roommate income to qualify||No||Yes||Yes||No|
|Cancelable mortgage insurance?||Yes||Yes||Yes||No|
Applying for HomeOne is just like applying for any other home loan. But first, contact a lender and verify they are approved to issue Freddie Mac loans. Then, complete an application. The lender will pull your credit and review your loan file and issue an approval if you meet the requirements.
HomeOne is a mortgage loan type created by Freddie Mac and administered by regular mortgage lenders. It offers a way to buy a home with 3% down without income or geographic restrictions.
You can have a first mortgage up to 97% of the home's price. Additionally, you can get an Affordable Seconds second loan for up to 105% of the home's price to cover down payment and closing costs. Affordable Seconds are loans issued by governments and non-profits to help first-time buyers coverthe upfront costs of homebuying.
Apply for HomeOne
The HomeOne first-time buyer program is a powerful but as of yet relatively unknown tool.
Apply for a HomeOne mortgage to see if you're eligible and if this is the program that can help you step into homeownership.