You’ve looked at home prices. You’ve run the numbers. Maybe buying a home feels doable until you get to one thing:
The down payment.
If you’re assuming you need 20% down, you may have more options than you think.
Fannie Mae’s HomeReady® mortgage allows eligible buyers to purchase a one-unit primary residence with as little as 3% down, while offering additional flexibility with credit, down payment funds, and certain sources of qualifying income.
What Is a HomeReady Mortgage?
HomeReady is a conventional mortgage backed by Fannie Mae and designed for borrowers whose qualifying income falls within the program’s limits.
Because it’s conventional financing, buyers who put less than 20% down will typically have private mortgage insurance, or PMI. Unlike the mortgage insurance on a typical 3.5% down FHA loan, conventional PMI can eventually be removed once applicable equity and servicing requirements are met.
Key HomeReady Benefits
As Little as 3% Down
Eligible buyers purchasing a one-unit primary residence may be able to put down as little as 3%.
HomeReady may also be available for certain 2- to 4-unit primary residences.
Flexible Credit Requirements
Credit still matters when qualifying for HomeReady, but there is no single minimum credit score required for loans approved through Fannie Mae’s Desktop Underwriter, or DU.
Instead, DU evaluates the borrower’s overall credit profile and other risk factors.
In practice, a 620 credit score is still a common benchmark for conventional financing, and manually underwritten fixed-rate loans generally require at least a 620 score.
Gifts and Assistance Can Help With the Down Payment
Your entire down payment does not necessarily have to come from your own savings.
HomeReady allows eligible sources of funds that may include:
- Gifts
- Grants
- Approved down payment assistance
- Community Seconds® financing
- Certain employer assistance programs
For an eligible one-unit purchase, HomeReady generally does not require a minimum contribution from the borrower’s own funds.
That can be especially helpful for buyers who have steady income but don’t want to use all of their savings just to get through closing.
A Non-Occupant Co-Borrower May Be Allowed
HomeReady allows non-occupant co-borrowers in some situations, such as a parent or other family member who will not live in the home.
This can provide another option for buyers who need help qualifying.
Some Rental or Boarder Income May Count
HomeReady also offers flexibility with certain types of additional income.
In qualifying situations, rental income or boarder income may be considered when determining eligibility.
You Don’t Have to Be a First-Time Homebuyer
HomeReady is not limited to first-time buyers.
If all occupying borrowers are first-time homebuyers, at least one borrower may be required to complete an approved homeownership education course before closing.
Fannie Mae’s free HomeView® course is one available option.
HomeReady eligibility and requirements can vary based on factors such as property type, occupancy, underwriting method, loan-to-value ratio, source of funds, income, and borrower profile. Additional requirements may apply to 2- to 4-unit properties, non-occupant co-borrowers, manually underwritten loans, and the use of rental or boarder income.
HomeReady Income Limits
One of the biggest differences between HomeReady and a standard conventional mortgage is the income limit.
The total qualifying income used for the mortgage generally must be at or below 80% of the area median income, or AMI, for the property’s location.
That means the income limit can vary depending on where you’re buying.
Fannie Mae provides an AMI lookup tool where you can check the applicable limit for a particular location.
Your Ideal Lending loan officer can also check the income limit as part of your pre-approval and determine whether HomeReady is an option.
Some Buyers May Qualify for a $2,500 Credit
Fannie Mae is currently offering an additional $2,500 borrower credit for certain HomeReady buyers.
To qualify, total qualifying income generally must be at or below 50% of the area median income, and at least one borrower must be a first-time homebuyer.
The credit may be used toward eligible down payment and closing costs.
As of September 2026, the current program extension runs into early 2027. Program availability and requirements can change, so eligibility should be confirmed when you apply.
HomeReady vs. Home Possible vs. a Standard 3% Down Conventional Loan
If you’re researching low-down-payment conventional loans, you may also come across Freddie Mac’s Home Possible® program and Fannie Mae’s standard 97% loan-to-value option.
Here’s how they generally compare:
| HomeReady® | Home Possible® | Standard Fannie Mae 97% | |
|---|---|---|---|
| Minimum down payment | As low as 3% | As low as 3% | As low as 3% |
| Income limit | 80% of AMI | 80% of AMI | No program income limit |
| First-time buyer required? | No | No | At least one borrower generally must be |
| Boarder income flexibility | Yes | Yes | More limited |
| Automated underwriting | Fannie Mae DU | Freddie Mac LPA | Fannie Mae DU |
The right option depends on more than the down payment.
Your income, credit profile, property type, available funds, and the location where you’re buying can all affect which program makes the most sense.
Can HomeReady Work With Down Payment Assistance?
In some cases, yes.
HomeReady allows eligible gifts, grants, Community Seconds, and certain approved down payment assistance programs.
That can help reduce the amount of money a buyer needs to bring to closing.
Your loan officer can look at the programs you qualify for and show you how the numbers compare.
Is HomeReady Worth Looking At
HomeReady may be a good option to explore if you want a conventional mortgage with a low down payment and your qualifying income falls within the program’s AMI limit.
It can be especially helpful for buyers using eligible gifts, grants, or down payment assistance, and for those who want the flexibility of a conventional loan without needing 20% down.
The best way to know whether it fits is to run your actual numbers.
Meet the Ideal Lending team and we’ll review your income, the AMI limit for the area where you’re buying, and the loan programs available to you.
You may be closer to buying a home than you think.
Ideal Lending LLC, NMLS 2471779. Ideal Lending LLC is not acting on behalf of or at the direction of the federal government, and this offer is not being made by an agency of the government. Loan programs, guidelines, rates, terms, and eligibility requirements are subject to change. Not all applicants will qualify. Source: Fannie Mae.
