Freddie Mac recently introduced a $2,500 housing credit for prospective homebuyers earning 50% or less of their area median income. This credit can be applied towards down payments or closing costs for buyers utilizing Freddie Mac’s Home Possible mortgage product or the HFA Advantage program, both tailored for very low-income borrowers with minimal down payment requirements. This credit will be available from March 1, 2024, through February 28, 2025.
Mac’s Commitment to Affordable Housing Initiatives
According to Sonu Mittal, SVP and head of Single-Family Acquisitions at Freddie Mac, down payment and closing costs pose significant barriers to homeownership for low-income homebuyers. Expressing Freddie Mac’s commitment to assisting these families, Mittal highlighted their ongoing support through various programs since 2018 and their recent initiative to expand assistance through the Home Possible program.
Home Possible Program: Breaking Down Barriers to Homeownership
The $2,500 low-income housing credit is versatile. It covers not only down payment costs but also escrow, mortgage insurance premiums, and other closing expenses. With mortgage rates on a downward trend, aspiring homeowners may find themselves better positioned to pursue homeownership. Freddie Mac’s Home Possible mortgage offers enhanced options and credit flexibility to facilitate homeownership for low-to very low-income borrowers. Accessible through the Home Possible program, this mortgage requires a minimum down payment of 3% and provides expanded options to increase homeownership responsibly.
Exploring Unique Mortgage Solutions and Eligibility Criteria
Freddie Mac purchases mortgages from private lenders and converts them into mortgage-backed securities. This correspondingly bolsters liquidity in the mortgage market. Among their unique mortgage products are Home Possible mortgages, available exclusively through private lenders. In order to qualify for the low-income homebuyer credits, individuals must secure a conventional mortgage from a private lender. Government-backed mortgages like FHA loans are not eligible in this program. However, eligibility may extend to mortgages obtained through local housing finance agencies, including Freddie Mac’s HFA Advantage mortgage.
Qualifications
Qualified applicants receive the $2,500 credit through their lender, which Freddie Mac reimburses upon loan sale. When combined with the Home Possible products’ low down payment requirements, this credit serves as a valuable tool for bridging the gap between savings and the necessary funds to purchase a home. To qualify for Home Possible, applicants must meet a minimum down payment of 3% and a credit score of at least 660. First-time homebuyers may also need to complete a homeownership education course. This is a prerequisite for both Home Possible and HFA Advantage mortgages. Local housing finance agencies can provide information on lenders offering these mortgages.
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