HomePath Mortgage Loans

When the housing crisis hit in 2008, the Federal Mortgage Association (commonly known as Fannie Mae) was left with a significant amount of property in default. People who could no longer afford to pay their mortgages simply walked away from them. This led to an influx of vacant homes and foreclosures on the market. To resolve this issue, clear out inventory, and to make the process of purchasing a foreclosure easy and appealing, Fannie Mae created HomePath Mortgage loans. These loans are only available on Fannie Mae properties. They have some great benefits that aren’t found in a traditional loan and are typically more flexible than an FHA loan.

A foreclosure often presents a good opportunity but purchasing one can be a tricky process. Many lenders won’t offer traditional financing on a foreclosure, especially if the property requires significant repairs before it can pass inspection. If you’re looking at foreclosed properties, you’ll want to understand the advantages of the HomePath program.

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Purchasing a Foreclosure with the HomePath Program

The purpose of the HomePath program is twofold – it first focuses on educating the consumer and then offers incentives for purchasing a Fannie Mae property. An educated homebuyer who understands the process of purchasing property, has a grasp on what they can comfortably afford, and is confident they can commit to a monthly mortgage payment is less likely to default on their loan. This is the type of consumer Fannie Mae is looking for.

This program offers significant advantages to those looking to purchase a foreclosure. After the homebuyer completes the HomePath Buyer Ready course, they are eligible for a three percent closing costs (versus the average five percent). Here are some things you’ll want to know about program:

  • There is no inspection required on the property unless the buyer plans to borrow money for renovations.
  • Traditionally, a HomePath loan will have a slightly higher interest rate than a traditional loan.
  • The earnest money requirement is waived.
  • Buyers may put down as little as three percent on the loan.
  • If the buyer puts less than 20% down, there will be a Private Mortgage Insurance (PMI) payment added to the monthly premium. Once the home equity reaches 20%, the PMI will be dropped.
  • Buyers with less than perfect credit are often still eligible for this program.

If you are considering the purchase of a foreclosure, and would like more information on the HomePath program, give us a call at 877-948-2562.