Fannie Mae HomePath Mortgage Qualifications

By Sari R. Updated on 6/19/2014

Fannie Mae HomePath is a specific type of conventional loan that differs slightly from other conventional loans. A HomePath loan offers borrowers a 5% down payment with no mortgage insurance and no appraisal. Often, the rates are higher than conventional mortgages due to the fact that there’s no mortgage insurance. Here are the the standard HomePath mortgage qualifications:

Buy a Fannie Mae HomePath Eligible Property.

The biggest restriction surrounding the HomePath mortgage is the fact that you need to purchase a HomePath Real Estate Owned, or REO property. HomePath REOs are distressed properties owned by Fannie Mae. Make sure to check with your lender before you see the house.

Have a Credit Score of 660 or Higher.

If you are going to put forth a down payment that is below 20%, you should have a credit score that is 660 or higher in order to qualify for a HomePath mortgage loan. This is very much in line with the standard guidelines for conventional loans. Provided your down payment that is equal to or greater than 20%, you can have a slightly lower credit score.

Have an Appropriate Use of Home.

If you are going to use the property as an investment, second home, or primary residence, it is eligible for a HomePath loan.  If the property is used in any other way, it won’t be eligible for a HomePath loan.

Have a DTI Ratio of 45% or Less.

In order to qualify for a HomePath mortgage, you must have a Debt-to-Income ratio (DTI) of 45% or less. This is due to the fact that you can put forth a low down payment with a HomePath loan. This specific DTI reduces the risk that you won’t be able to make your payments on a regular basis due to your other debts. If you do have a DTI ratio that is higher than 45%, you will have to pay mortgage insurance on your loan.

HomePath mortgage financing is a great way for first time home buyers with good credit to be able to afford a home. The loan program has several benefits, among them being: low down payment, no mortgage insurance, and flexible loan terms. If you’re interested in a HomePath mortgage, make sure to contact your lender today and ask if there are any eligible HomePath properties near you.