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Home Possible® Mortgage FAQ

Disclaimer

The information on this page is not part of, and is not a replacement or substitute for, the requirements found in the Freddie Mac Single-Family Seller/Servicer Guide and your other Purchase Documents.

Buyer and Property Requirements

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  1. Do I need to verify all borrower income if the borrower doesn't 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. Take a brief Home Possible® Income Eligibility tutorial on income requirements for Home Possible mortgages for more information.

  2. When I underwrite a borrower for a Home Possible mortgage, should I include spousal income or income from other members of the household who are not borrowers on the mortgage?

    No. Only borrower income can be included when determining eligibility for a Home Possible mortgage. You can't include a spouse's income or income from any other member of the household who is not a borrower on the mortgage.

  3. 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.

  4. If more than 30% of the borrower’s income is rental income from their 1-unit primary residence, how much of that rental income can be used to qualify the borrower for a Home Possible mortgage?

    Rental income from a one-unit primary residence can account for up to 30 percent of qualifying income. Any portion of the borrower's rental income from their one-unit primary residence that exceeds 30 percent of the borrower's total income cannot be used to qualify the borrower. For rental income requirements, see Single-Family Seller/Servicer Guide (Guide) Section 4501.6: Borrower income and qualifying ratios for Home Possible mortgages.

  5. 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 area median income (AMI).

  6. Do all Home Possible borrowers need to occupy the home they're 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.
  7. 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:

  8. How do I underwrite multiple borrowers for a Home Possible mortgage in the case where one (or more) borrower(s) has a usable credit score and others do not?

    Borrowers may be eligible for a Home Possible mortgage even if one or more of the borrowers on the mortgage does not have a usable credit score. Sellers can qualify such borrowers in one of the following ways:

    Please note that income contributed by a borrower with insufficient credit history can only account for up to 30 percent of the total qualifying income.
  9. 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.

  10. 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.

  11. Can a Seller deliver a Seller-owned modified mortgage that is a Home Possible mortgage to Freddie Mac?

    Yes. A Seller can deliver a Seller-owned modified mortgage that is a Home Possible mortgage modified for the purpose of a reduction in the interest rate.

  12. For a Seller-owned modified mortgage that will be delivered as a Home Possible mortgage, is the Seller required to re-underwrite the mortgage and requalify the borrower before delivering the mortgage to Freddie Mac?

    If the original mortgage is an LPA Accept Mortgage, the Seller is not required to resubmit the modified mortgage to Loan Product Advisor, nor requalify the borrower. If the original mortgage is not an LPA Accept Mortgage, the Seller is required to manually re-underwrite the mortgage and requalify the borrower in accordance with the requirements in Topics 5100 through 5500.

  13. What age of documentation requirements must the Seller comply with for Seller-owned modified mortgages that are Home Possible mortgages?

    The age of documentation must be dated no more than 120 days before the modification date for Seller-owned modified mortgages that are Home Possible mortgages. The Seller is required to comply with requirements in Guide Section 5102.4.

  14. Can an LPA Accept Mortgage that is a Home Possible mortgage modified under the Seller-owned modified mortgage requirements retain the ACE appraisal waiver?

    The Seller cannot retain the ACE appraisal waiver from the original LPA Accept Mortgage for the modified mortgage. An appraisal would be required in this instance.

  15. Does the Seller need to obtain a new appraisal if the original LPA Accept Mortgage received an ACE appraisal waiver?

    Yes. You must obtain a new appraisal with an effective date that is no more than 120 days prior to the modification date before delivering the modified mortgage to Freddie Mac.

  16. Can Home Possible be used in conjunction with negotiated provisions/terms of business?

    Yes. Unless otherwise specified, negotiated provisions may be used with Home Possible mortgages.

Closing Costs and Down Payment Assistance

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  1. 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.

  2. 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 4501.7 (c) for more information on sources of funds.

  3. Can I use premium financing to fund the down payment?

    No. Down payment assistance can't be funded through the mortgage transaction in any way, including through points, price, fees or any activity that might be described as premium financing.

  4. 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.

  5. What guidelines should I follow to document in the loan file that a gift or grant is not funded by proceeds from the mortgage?

    You should be able to show that:

    • Funds came from an established program that was fully vetted through your risk management team.
    • Funds were allocated for the sole purpose of contributing to loans originated to low- or moderate-income borrowers, or to properties located in low- or moderate-income areas.
    • The provider is not affiliated directly or indirectly with an interested party to the transaction.

Borrower Education

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  1. Do all Home Possible borrowers need to take a homeownership education course?

    At least one borrower must participate in a homeownership education program before the Note Date, or the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages, in each of the following instances:

    • For purchase transaction Home Possible mortgages when all occupying borrowers are first-time homebuyers.
    • For purchase transaction Freddie Mac HomeOne® mortgages when all borrowers are first-time homebuyers.
    • For any transaction when the credit reputation for all borrowers is established using only noncredit payment references.
  2. Is homeownership education required for a Home Possible refinance transaction?

    No. Homeownership education is not required for Home Possible mortgages that are refinances.

  3. 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.

  4. 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?

    Yes. If the program meets our requirements, it would fulfill Home Possible homeownership education requirements. For details on education requirements see Guide Section 5103.6: Homeownership education.

  5. Who can provide post-purchase and early delinquency counseling to borrowers?

    A Seller or Servicer must provide early delinquency counseling to borrowers who have problems meeting their mortgage obligations. The counseling may be provided by a non-profit, third-party homeownership counseling agency, a HUD-approved national counseling agency specified by Freddie Mac or the servicer itself, provided it has the resources to provide counseling comparable to the other options. For details, refer to Guide Section 9101.2: Servicer collection efforts for Mortgages secured by Primary Residences.

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