Fannie Mae HomeReady and Freddie Mac Home Possible: Loans With 3% Down
Buy a home with just 3% down using Fannie Mae’s HomeReady or Freddie Mac’s Home Possible loans.
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Fannie Mae’s HomeReady and Freddie Mac’s Home Possible are both conventional loan programs that allow you to buy a home with just 3% down. These loans are very similar, so if you meet the minimum qualifications, the choice often comes down to which program is offered by your lender.
✅ Requirements for HomeReady and Home Possible
Income limits: You can’t earn more than 80% of your area’s median income. Freddie Mac’s website provides a tool for verifying your income eligibility based on your location.
Loan limits: As of 2025, loans are capped at $806,500 in most areas, or $1,209,750 in certain high-cost markets.
Homeownership counseling: You’ll need to take an online homeownership course if you’re a first-time borrower.
Debt-to-income ratio: Your monthly debts can’t exceed:
45% of your income for a Home Possible mortgage.
50% for a HomeReady mortgage.
» MORE: Use NerdWallet’s debt-to-income ratio calculator to see if you qualify.
Credit score:
Home Possible: Minimum 660.
Home Ready: Minimum 620.
» MORE: Get your free credit score
👀 Pros and cons of HomeReady and Home Possible
Pros
Buy a house with a down payment as low as 3%.
You can own another property at the same time.
If you’re buying a single-family home, 100% of your down payment or closing costs can come from gift money.
Cons
You’ll have to pay private mortgage insurance (PMI) until you’ve built up at least 20% home equity.
Your income must be at or below 80% of the median for your area.
🏡 Other low-down-payment mortgage options
Home Possible and HomeReady aren’t your only choices. Here’s how they compare with FHA and USDA loans:
Down payment: Minimum requirement of 3.5%.
Credit score: At least 580 to qualify for the minimum down payment.
Mortgage insurance: Required for the entire life of the loan if you make the minimum down payment.
📌 Unlike FHA loans, Home Possible and HomeReady loans allow you to cancel your mortgage insurance after you’ve gained 20% home equity.
Down payment: 0% required. You can finance 100% of the home.
Income limit: Must earn less than 115% of the median income in your area to qualify. You can find your area’s income limits here. Compare this with Home Possible and HomeReady, which cap income at 80% of the local median in any given location.
Location: Available only in rural and suburban areas. Check eligibility using the USDA’s interactive map.
📌 Income limits for USDA loans are higher than for HomeReady and Home Possible, but USDA loans are geographically restricted.