Those wanting their own home might just be 'HomeReady'

A lot of folks have always dreamed of owning their own home, but there are circumstances in life that may prevent them from achieving that goal.

Perhaps they have a lot of student loan debt from their college days, or there might be a situation where they have to occasionally rely on parents or other family members for a little additional income.

No one is going to give them a mortgage loan in that situation, right?

Not so fast.

HomeReady is a unique home mortgage loan for low-to-moderate incomes.

"We see many people who desire and are prepared for the serious responsibilities of home ownership, but just need a 'jump start' to get them on their way," said Wendy Dawson, VP of Mortgage at Coastal Federal Credit Union. "The HomeReady loan is unique in this regard. It helps borrowers overcome the barrier of the initial down payment, and it offers some pretty flexible rules for qualification."

What's even more interesting about this loan is that it's not only for first-time home buyers. Repeat buyers can qualify, too.

Often the biggest obstacle to home ownership is having the cash to cover the down payment.

The HomeReady loan only requires 3 percent of the purchase price. Better still, the down payment doesn't have to be solely from the borrower's own funds. It can come from gifts, grants, or even assistance programs that cover the down payment and any associated closing costs.

The HomeReady mortgage offers new flexibility on what is considered income.

For the first time, income from a household member who is not a borrower (in other words, they won't be on the mortgage) will be considered.

This means in multi-generational households, the income of children, grandparents, other extended family members and non-relatives may help buyers qualify for a HomeReady mortgage.

Another twist: Not all borrowers have to live in the property. Income limits do apply, but, for example, parents -- who won't be living in the home -- can be co-borrowers on the loan to help their children qualify.

Additional income sources, like rent from a roommate, also may be considered as a permissible source of income to the borrower.

"The HomeReady mortgage is a specific loan to help low-to-moderate income families realize the dream of home ownership," Dawson said. "But because Fannie Mae included income limits, not everyone will qualify."

Potential homeowners should realize they must take an online homeownership course to prepare them for the responsibilities of owning a home.

One more bit of good news is that the mortgage insurance coverage on the HomeReady loan is often lower than what’s required on more traditional loans. So borrowers may enjoy a slightly lower monthly mortgage payment.