Guide

Freddie Mac HomeOne Loan | Program guide and requirements

Freddie Mac HomeOne Loan | Program guide and requirements
Written by Publishing Team

HomeOne loan makes it easy to buy a home

Saving for a down payment is one of the biggest hurdles for first-time homebuyers.

Fortunately, there are a number of low down payment loan options — and even without a down payment. The Freddie Mac HomeOne Loan is such a program.

HomeOne lets you buy a home at just 3% off. And it has more flexible eligibility guidelines than many programs – making this an attractive option for first-time homebuyers.

Check for 3% mortgage eligibility. START HERE (December 28, 2021)


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What is a Freddie Mac HomeOne Loan?

Introduced in 2018, Freddie Mac’s HomeOne Mortgage Loan is designed to make financing easier for potential home buyers as well as homeowners looking to refinance.

With its lax underwriting guidelines, a HomeOne loan can be a great option for low-income or middle-income borrowers.

“This loan is primarily aimed at first-time buyers who do not have a lot of disposable income but want to enter the market with a low down payment,” says Leonard Ang, CEO of iPropertyManagement.

“This loan is primarily aimed at first-time buyers who do not have a lot of disposable income but would like to enter the market with a low down payment.”

It is important to note that Freddie Mac is not a mortgage lender.

Rather, it is a government-sponsored agency created to help middle- and low-income Americans buy homes.

“Freddie Mac doesn’t offer loans like HomeOne to buyers directly. Instead, Freddie Mac buys syndicated mortgages from banks and other lenders who provide home loans to borrowers,” notes Imani Francis, mortgage expert at Loans.org.

This means that you can get a HomeOne mortgage from any mortgage lender that offers Freddie Mac programs (which most of them do). And you have the opportunity to shop for the lowest interest rate.

Find your lowest mortgage rate. START HERE (December 28, 2021)

About HomeOne Mortgage

One of the main benefits of a HomeOne mortgage loan is that it allows you to purchase real estate at a discount of up to 3%. This is a huge advantage compared to other traditional loan programs that may require 5, 10 or even 20% minimum.

Another advantage is that there are no geographic restrictions on where you can buy a home with a HomeOne loan. There are no income limits associated with this financing either.

What’s more:

  • You are allowed to buy one unit real estate with Freddie Mac HomeOne loan
  • Eligible porpoise species include a single-family home, cottage, or condominium
  • The approval process is less strict than other types of loans
  • The rents you get from a roommate or limits can count up to 30% of your income used to qualify for this loan

However, by choosing a HomeOne mortgage, you will have to pay private mortgage insurance if your loan-to-value (LTV) ratio is greater than 95%, according to Freddie Mac. This means that the PMI is required any time you cut less than 5%.

Also, if you choose to refinance through the HomeOne Loan Program, you will not be allowed to withdraw cash.

“Freddie Mac makes this program available through participating lenders, such as banks, mortgage lenders, mortgage brokers, and credit unions,” Francis adds.

Eligibility Requirements for HomeOne

To qualify for a HomeOne loan, you must meet the following criteria:

  • At least one borrower must be a first-time home buyer if this loan is for a home purchase
  • The property must be a primary one-unit dwelling (which can include a single-family home, townhouse or condo)
  • You need to deduct at least 3 percent of the purchase price
  • Your loan amount must be within the corresponding loan limits
  • If all borrowers are buying homes for the first time, at least one borrower must complete a home ownership education program before the mortgage deed date
  • All borrowers must occupy the mortgaged premises as their primary residence

Note that the definition of “first-time home buyer” is not as strict as it seems. Anyone can qualify as a first-time buyer as long as they have not owned a home in the past three years.

So, even if you owned a previous home, but have been renting for the past few years, you may be eligible to purchase your next home via the Freddie Mac HomeOne Program.

Check for 3% mortgage eligibility. START HERE (December 28, 2021)

Single income limits

One of the best features of the Freddie Mac HomeOne loan is that there are no income caps to qualify. This makes the program more accessible than some of the other 3 percent discount loans.

“There are no income limits, but at least one borrower needs a good credit score,” says Lyle Solomon, lead attorney at Oak View Law Group.

Also be aware that the maximum debt-to-income (DTI) ratio for a HomeOne loan is 45%, the maximum life value is 97%, and the minimum credit score that many lenders are looking for is typically 620.

Freddy Mac HomeOne vs. Possible Home

Freddy Mac supports another loan program called Home Possible. Like HomeOne, it offers loans with up to 3% discount on single-family homes.

However, Home Possible is only available to anyone who makes less than 80% of the average monthly income for the zip code they will purchase. The minimum FICO credit score is usually 660, and the DTI cannot exceed 43 to 45%.

This means that it is a little easier to qualify for a HomeOne loan than a HomePossible loan.

Additionally, with a home mortgage, you can qualify with the income of a parent or other individual who agrees to co-sign the loan with you. But at least one borrower must participate in a home ownership education program if you are buying a home where all borrowers staying will be first time buyers.

HomeOne Mortgage Alternatives

Not everyone will qualify for a HomeOne loan. And even if you qualify, a different loan program may be better for your situation. So be sure to explore all of your options.

If you’re looking for a low down payment mortgage, some great alternatives to Freddie Mac HomeOne include:

  • Ready-to-deliver loan from Fannie Mae Requires a cut of 3%, a minimum FICO credit score of 620 to 680, a maximum DTI of 50%, a maximum DTI of 97%, and annual income cannot exceed 100% of the median income in the region ( AMI)
  • Conventional loan 97 (Provided by Fannie Mae and Freddie Mac) – Requires 3% less, minimum 620-660 FICO credit score, max 50% DTI, max 97% LTV
  • FHA Loan Requires a minimum of 3.5%, a minimum of 580 credit score, a maximum of 43% of a DTI in most cases
  • USDA loan – Requires minimum 640 FICO credit score, 41% max DTI Annual income cannot exceed 115% of median income for your area Must purchase in rural eligible areas.
  • home loan VA Requires 0% lower, 580-660 minimum FICO credit score, 41% max DTI, Must be a qualified veteran, active duty member, or spouse of a veteran

Not sure which loan is best for you? A loan officer can help you explore your options and make a decision.

Freddie Mac HomeOne FAQ

What is Freddie Mac’s HomeOne Loan?

Targeted to first-time buyers and homeowners seeking refinancing, HomeOne Mortgage Loan allows you to purchase a home for as little as 3 percent. There are no income limits or geographic restrictions on where you can buy property, which could be a single-family dwelling, a condominium or a city house. But you will pay mortgage insurance if your LTV is greater than 95 percent. No cash refinancing is allowed.

How do I qualify for a HomeOne mortgage?

To be eligible: at least one borrower must be a first-time buyer if this is a purchase loan; The house must be a basic one-unit dwelling; At least 3 percent is required; If all borrowers are first-time buyers, at least one borrower must complete a home buyer education program; The home must be occupied by all borrowers as the primary dwelling; You are not allowed to own property in the three years prior to your loan application.

What are HomeOne Mortgage Rates?

Experts say HomeOne mortgage rates are usually lower than traditional mortgage rates. But keep in mind that the price being quoted will depend on many factors, including your credit score, employment history, and more.

How do Freddie Mac loans work?

Freddie Mac does not provide loans to borrowers directly. Instead, you buy pooled mortgages from banks and other lenders who provide mortgage loans to borrowers. Freddie Mac offers the HomeOne Loan Program through participating banks, mortgage lenders, mortgage brokers, and credit unions. Loans that meet Freddie Mac’s criteria are classified as matching loans.

What is the maximum DTI for a HomeOne loan?

The maximum debt-to-income (DTI) ratio allowed for a HomeOne loan is 45 percent. This means that all monthly debt payments, including the mortgage, cannot exceed 45 percent of your pre-tax income.

Is there a minimum credit score for Freddie Mac’s HomeOne?

Although there is no set minimum credit score required to qualify for a HomeOne loan, most lenders require a score of 620 or higher.

Do I have to be a first-time home buyer to use HomeOne?

At least one borrower must be a first time home buyer if this loan is for a home purchase. Also, if all borrowers are first-time home buyers, at least one borrower must complete a home ownership education program.

Can I refinance with a HomeOne mortgage?

Yes, refinancing is allowed under the HomeOne Mortgage Loan, although no cash refinancing is allowed.

What is the maximum lifetime value of HomeOne?

The maximum loan-to-value (LTV) ratio for a HomeOne mortgage is 97 percent, which means you’ll need to cut at least 3 percent. However, if you use affordable seconds financing to pay your down payment and closing costs, the lifetime value can be as high as 105 percent.

Can I Use Down Payment Assistance with a HomeOne Loan?

Yes, you can use down payment assistance, such as a gift, grant, or affordable seconds loan, to get a HomeOne loan.

Show me today’s rates (December 28, 2021)

The information on the Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed here are those of the author and do not reflect the policy or position of Full Beaker, its officers, parents, or affiliates.

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