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Frequently Asked Questions: Home Possible® Mortgages

These frequently asked questions about Home Possible mortgages will help you better understand some of the requirements for Freddie Mac's flagship low down payment offering, including requirements for homeownership education and lender gifts and grants.

Buyer and Property Requirements

  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?
  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?
  3. Can a borrower qualify for a Home Possible mortgage if they own another property?
  4. The Guide states that a borrower's rental income from their one-unit primary residence can’t exceed 30 percent of the total income used to qualify for a Home Possible mortgage. If more than 30 percent of a borrower's income is rental income, how much, if any, of that rental income can be used to qualify the borrower?
  5. Do you have to be a first-time homebuyer to qualify for a Home Possible mortgage?
  6. Do all Home Possible borrowers need to occupy the home they're purchasing as their primary residence?
  7. If no borrower on a loan application has a credit score, are the borrowers eligible for a Home Possible mortgage?
  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?
  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?

Closing Costs and Down Payment Assistance

  1. Can I give a gift or grant to assist with a borrower's down payment?
  2. What are the acceptable sources of funds for the borrowers’ three percent down payment?
  3. Can I use premium financing to fund the down payment?
  4. Can I use premium financing to fund closing costs and prepaids?
  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?

Borrower Education

  1. Do all Home Possible borrowers need to take a homeownership education course?
  2. Is homeownership education required for a Home Possible refinance transaction?
  3. How can the homeownership education requirement for first-time homebuyers be fulfilled?
  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?
  5. Who can provide post-purchase and early delinquency counseling to borrowers?

Buyer and Property Requirements

  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 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. The Single-Family Seller Servicer Guide (Guide) states that a borrower's rental income from their one-unit primary residence can't exceed 30 percent of the total income used to qualify for a Home Possible mortgage. If more than 30 percent of a borrower's income is rental income, how much, if any, of that rental income can be used to qualify the borrower?

    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 Guide Section 4501.9: 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 100% of area median income (AMI), except in low-income census tracts, where there is no income limit.
  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 ratio requirements in the Guide. However at least one borrower must occupy the property as their primary residence.
  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:

    • Through Loan Product Advisor®, if they meet requirements in Guide Section 5201.1: Credit assessment with Loan Product Advisor.
    • Through manual underwriting, if they meet the requirements in Guide Section 4501.8: Underwriting requirements for Home Possible Mortgages.
  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:

    • Through Loan Product Advisor, if they meet requirements in Guide Section 5201.1: Credit assessment with Loan Product Advisor.
    • Through manual underwriting, if they meet the requirements in Guide Section 4501.8: Underwriting requirements for Home Possible Mortgages.


    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.

Closing Costs and Down Payment Assistance

  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 4501.10 (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

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

    No. Homeownership education is required only for a purchase mortgage when all borrowers are first-time homebuyers or if the credit reputation for all borrowers is established using only Noncredit Payment References. In both instances, at least one borrower must complete a homeownership education program for a purchase mortgage before the mortgage's note date.
  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 and Counseling. Borrowers may also choose to take our free homebuyer training CreditSmart® – Steps to Homeownership.
  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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