Home Ready

A Brief Guide About Home Ready In Texas

Home Ready

Fannie Mae’s Home Ready mortgage is specially designed for the diverse requirements of Texas borrowers, allowing flexibility not available with other traditional mortgage products. So, what does that mean for a Texas resident?

Generally, Home Ready mortgage deals with common financial challenges and provides expanded eligibility guidelines, including:

    • A 3% down payment option. For first-time and repeat homebuyers, they can buy a home with a low down payment of up to 3% of the buying price.
    • Co-borrower flexibility. In general, all borrowers don’t need to reside in the property. For instance, parents who won’t be staying in that home can be co-borrowers on that loan to assist their children in qualifying for a mortgage.
    • Support for extended families. Typically, income from any household member who isn’t a borrower will be considered. That means in multi-generational households in Texas, the income of kids, grandparents, or any other extended family member might help buyers in qualifying for a Home Ready mortgage.
    • Additional income sources. For rental payments, they might be considered as another agreeable income source to assist in qualifying a buyer. Income limits might apply.

How is Home Ready mortgage easier to qualify?

With Home Ready mortgage, the most notable difference is that it applies flexible rules when determining applicants’ debt-to-income ration. The requirements of a Home Ready program are more flexible in whose income might be added in your mortgage application. For example, you can depend on income from:

    • Another adult staying with you, such as an adult child, who contributes to the household’s income
    • Friends and family who may be assisting you in paying the mortgage loan, but do not live with you
    • The rental income from leasing any basement apartment to help in paying the mortgage.

Why is it Better to Own rather than Rent?

Undoubtedly, homeownership has numerous benefits. And some of them include having a house where you can do anything you want with it – decorate it, paint it, you name it! Apart from making it your home, you can find other benefits related to your particular home purchase loan. For instance, you might claim income tax deductions for any interest payment under your mortgage. Besides, by having regular monthly payment in your amortizing loan, you’ll build up your equity, rather than your landlords.

How Much am I Allowed to Borrow?

More often than not, loan programs demand that your total debt be considerably less than 45% of your actual gross monthly income. And this percentage comprises the new mortgage payments, credit card, student loans, any car loans, and all other debts you have incurred. However, it doesn’t include expenses such as gym memberships, utilities, cable bills, and such.

But, Home Ready mortgage does have flexible debt when it comes to income guidelines. For those who have a good history of paying their bills on time, then you might qualify for relatively higher debt to income ratios of up to 50% of your income.

Also, you need to think personally about the amount of debt you can live with. You should take your time to decide how much debt you want to manage and whether it’s an amount you could one day pay off.

Can I Save In Texas?

You should talk with a professional tax preparer or CPA to understand your deductions. However, you can also deduct from your income the specific amount of interest and property taxes you have paid for that year. With this reduction in your federal taxes, you can make purchasing a home more affordable than renting.