There are several advantages to a Home Possible mortgage program. Let’s walk through some common pros for home buyers. The first major benefit of this loan option is that it only requires a 3% down payment. This is lower than the minimum 3.5% down payment required for FHA loans. Your LTV compares how much you owe on your loan to the value of your house and expresses this as a percentage. In most cases, you’re required to have an LTV somewhere between 80% – 95% depending on the type of mortgage you’re getting.Low Down Payment
Low Loan-To-Value Ratio (LTV)
With Home Possible, you may be able to finance up to 105% of your home’s total value through the Affordable Seconds® secondary financing program. Affordable Seconds is a second mortgage that can be used to fund your down payment and closing costs. Check with your lender to determine whether this could be an option for you.
Keep in mind that Rocket Mortgage® doesn’t offer purchase loans with second mortgages.
Flexible Down Payment Sources
In addition to using a second mortgage to fund a down payment, you can also receive your down payment from gift funds (including from family members). For a one-unit primary residence, your entire down payment may come from a gift. According to Freddie Mac, you can also fund a down payment through grants, sweat equity, proceeds from an unsecured mortgage loan and Employee Assisted Housing (EAH).
Additional down payment assistance programs may also be available to you. Be sure to look around and explore all your options.
Manual Underwriting Available
Manual underwriting means someone goes through and evaluates your income and credit history along with the amount of assets you have and the suitability of the property. This is different from automated underwriting, which involves computerized decision-making based on your loan application. Sometimes additional requirements, such as specific FICO® Scores, may apply. For some borrowers, the manual underwriting process may be helpful.
Rocket Mortgage doesn’t offer manual underwriting for Home Possible loans at this time.
Lower Fees And Lenient Credit Requirements
All major mortgage investors like Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) have specific fees that are charged based on the loan amounts and different risk factors.
With Home Possible, the lowest median FICO® Score to qualify is 620. However, if your median credit score is 680 or better, there are no additional pricing adjustments on the loan. If your score is below 680, there’s a maximum price adjustment of 1.5% of the loan amount.
LLPA Credit Available
Theseloans come with a loan level price adjustment (LLPA) credit of 1% of the loan amount up to $3,500. If the loan is below $200,000, the credit will be $2,000 as opposed to 1%.
