San Diego 3% Down HomeReady Home Loan - Rates, Limits & Details (2023 Update)

San Diego's #1 HomeReady Home Loan in 2021

If you’re having trouble getting together your finances in order to get a home, then this is one of the loan programs that will appeal to you.

In order to help you figure out what you really need, we’ve got this article.

You’ll learn the basics of the program.

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If you are interested in the program after reading through our main article, you will be able to find more info in the pros and cons article, the question and answer article, and an explanation of the loan limits that you will find with this loan.

If you’re really on the fence, then we’ve also got a list of the reasons why this program might be best for you.

READ: 6 Reasons San Diego is California’s #1 Real Estate Buy in 2023 | 2024

If you’re interested in the program or have more questions about it, then just contact me. 

I’ll help you through the process.

Here's a quick rundown of our list:

Background of the Program

In December 2015, Fannie Mae came out with a new lending product called HomeReady.

After years of research and input from lenders, this new program was replacing MyCommunityMortgage – another product from Fannie Mae.

The aim is to help lower income, creditworthy borrowers have access to a sustainable mortgage product.

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HomeReady incorporates a new function into Desktop Underwriter which automatically tags and flags potentially eligible loans for the program.

Fannie Mae has a complete suite of tools that lenders use to assess the risk of home borrowers.

HomeReady uses these existing tools so that lenders can take advantage of the new program.

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HomeReady is a program that is prepared to give qualified borrowers access to all the benefits of owning a home while at the same time having access to competitive pricing and monthly payments that are sustainable.

The mortgage product is designed to open opportunities for lenders who serve a continually changing and dynamic demographic that is typical of the modern borrower.

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The premise of the program is to combine the risk assessment tools provided by Fannie Mae coupled with a solid, online education platform that will prepare potential homeowner borrowers in the best possible position to become successful in home ownership endeavors.

New guidelines have been written for this program.

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The pricing remains a favorable tool that lenders can utilize.

Furthermore, these guidelines completely eliminate standard loan pricing adjustments.

Potential home borrowers will be required to undertake an online training course designed to thoroughly educate and prepare these candidates for the home buying process.

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Within the online educational information that is provided, homeowners are given access to post-purchase support required to make their homeownership endeavors sustainable.

The educational course will be called Framework.

Framework will be supplied by the Housing Partnership Network and the Minnesota Homeownership Center.

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Furthermore, Framework meets or exceeds all of the requirements set forth by Housing and Urban Development Housing Counseling Program in addition to the National Industry Standards for Homeownership Education and Counseling.

For the first time in history, additional sources of income may be considered to determine the appropriate and applicable debt-to-income ratio.

These additional sources may be derived from a non-borrower household member.

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These HomeReady flexibilities quantifiably allow additional sources of incomes such as what may be obtained from other family members such as parents, aunts, uncles, brothers, sisters, and rental payments such as those derived from basement dwellings.

All of these additional incomes can be used to augment the qualifying income from a potential home borrower.

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Research conducted by Fannie Mae and its network of lenders has determined that the combined income from multi-generational housing situations is more stable than other, competing households whose income is equivalent to or is similar to the multi-generational houses.

This places the occupants occupying multi-generational houses in a more qualified position for potential homeownership.

The HomeReady program provides loans for up to 97 percent of the home is a value for qualified borrowers.

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Both first-time and repeated home borrower candidates are provided the opportunity to purchase a home with a down payment as little as 3 percent of the home’s market value.

This financial product from Fannie Mae is available to potential homeowner candidates from any income level for properties located in census tracts that are designated as low-income.

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HomeReady is also available to potential homeowner applicants who have incomes that are at or below 100 percent of the area median income (AMI) and for homes that are in high minority census tracts or in areas that are designated as disaster areas by the Federal Emergency Management Agency (FEMA).

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For all other properties in every other census tracts, borrowers can qualify for the financial product by showing record that they have an income level that is at or below 80 percent of the area median income for the area where the home is located.

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It is anticipated that potential homeowner candidates living in over 50 percent of the census tracts will be subject to the 100 percent AMI limit or will have no income limit to become eligible.

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Product Features

As a lender processes your loan, he or she will be automatically notified if your loan is eligible for the HomeReady program.

Nontraditional sources of income are eligible.

This may include non-borrowing household members.

It also includes income sources from people who don’t live in the house such as parents.

The program permits income from accessory units, such as the basement.

The loan allows up to 97 percent of the home’s value to be financed.

There is a lower mortgage insurance coverage requirement.

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Several sources of incomes may be used for the down payment of a house including, gifts, grants, Community Seconds®, and cash on hand.

These sources of income may also be used for the closing costs.

You may use the HomeReady program to purchase a manufactured home.

Although you are not required to be a first-time homebuyer, you are not allowed to already be a homeowner in the United States. Owning a home outside of the United States does not disqualify you.

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Necessary Qualifications

  • You may not own a residential property in the United States.

  • You must agree to pay $75 to take an online course that will educate you about what it means to be a homeowner. This homeownership counseling course is mandatory. At the end of the course, you will receive a certificate of completion.

Eligibility Facts

  • The HomeReady program is eligible to repeat and first-time homebuyers.

  • This program is not the same as MyCommunityMortgage. MyCommunityMortgage is a program that was retired by Fannie Mae late 2015.

  • You do not need to contact Fannie Mae to determine eligibility for this program. Fannie Mae has authorized its entire network of lenders to issue loans for this program.

  • You may shop around for different lenders of this program. This ensures that you receive competitive pricing.

  • If your home lender does not issue a HomeReady loan, it may mean that the lender has opted out from this program. That’s OK – there are several lenders within the network who have not opted out from this program.

  • You do not have to have a good credit for this program. Your credit score can be as low as 620 to be eligible for this program.

  • The mortgage rates for this HomeReady program you the exact same mortgage rates as a “traditional” mortgage. A premium does not get applied to a HomeReady loan. The purpose is to allow for the possibility of lower mortgage loan rates than through other 3 percent programs such as the Conventional 97.

  • Shopping around makes a difference. Mortgage rates can vary as much as 50 points from one lender to the next. Make sure you receive several quotes before you make a decision.

  • Home ready loans can be used for condominiums, co-ops and manufactured houses. Furthermore, HomeReady loans can be used on multi-unit homes up to four units. They cannot be used for homes that have been zoned for five or more units.

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  • You only need 3 percent of the home’s value as a down payment.

  • Your down payment on a HomeReady loan can be gifted from just about any source – including a spouse, a girlfriend or boyfriend, or a fiancé. You do not have to prove that the money is yours.

  • When you have a HomeReady mortgage loan, you still have access to the entire line of the fixed rate mortgage products. This includes a 10-year fixed-rate mortgage, a 15 year fixed rate mortgage, a 20-year fixed-rate mortgage, and a 30-year fixed-rate mortgage.

  • Borrowers that are utilizing the HomeReady mortgage program also have equal access to the entire line of adjustable rate mortgage products. This includes the five-year adjustable rate mortgage, the seven-year adjustable rate mortgage, and the 10-year adjustable rate mortgage.

  • You may own or another home outside of the United States, a timeshare inside the United States, or commercial property in the United States. You may not own a residential property within the United States.

  • You may use a HomeReady alone to refinance your current loan. What you may not do is do a cash-out refinance. You may only do a rate-and-term refinance.

  • You are not required to include other people on your home ready loan application – even if you use their income to help you qualify. What you do need to do is show proof of this person’s income and get them to sign a statement that indicates their intention to live with you for at least 12 months.

  • You do not need to show a history of cohabitation in order to use somebody else’s income on your home ready mortgage application. Once again, you have to get them to sign a statement that explicitly states that they intend to live with you for at least 12 months.

  • Your cohabitants do not have to be legal residents of the United States.

  • Your mortgage rate with the HomeReady program it will be lower than mortgage rates for conventional mortgage loans. The difference in your rate will be a larger if you put down a less than 20 percent.

  • The program places a 50 percent debt-to-income ratio limit on the borrower.

  • This program still requires the borrower to obtain a private mortgage insurance. This program features a lower insurance cost than other conventional mortgage loans. You must continue to pay for this private mortgage insurance until your home-to-loan value reaches 80 percent of the original purchase price or when it reaches 80 percent of the home’s market value.

    Get Pre-Approved for a San Diego home loan in 60 seconds or less – no social security number needed. Get Started ›


If you are interested in the program after reading through our main article, you will be able to find more info in the pros and cons article, the question and answer article, and an explanation of the loan limits that you will find with this loan.

READ: 9 Best Places for Families to Live in San Diego in 2023 | 2024

If you’re really on the fence, then we’ve also got a list of the reasons why this program might be best for you.

What do you think?

Is this a great option for you in San Diego?

I would love to help assist you with your home purchase, home sale, or home loan - please feel free to give me a call, text, or use the form below. 

Your HomeReady Insider, 


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