HomeReady will assist borrowers in identifying eligible loans and create a simple and certain process for lenders, according to the group.
“HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” Fannie Mae vice president for underwriting and pricing analytics, Jonathan Lawless, said.
“We are also confident this mortgage option will create business opportunities for lenders serving the changing demographics and borrower needs seen in today’s market. The combination of our risk management safeguards and an innovative online education tool will put HomeReady borrowers in a strong position to succeed in homeownership.”
Fannie Mae said its HomeReady pricing is “favourable and simplified for lender use and eliminates or caps standard loan level price adjustments”.
The new lending option allows income from a non-borrower household member to be considered in determining an applicable debt-to-income ratio for the loan.
The move is in response to recent Fannie Mae research that showed extended households tend to have incomes that are as stable as, or more stable, than other households at similar income levels.
HomeReady will be available to borrowers at any income level for properties in designated low-income census areas, and to borrowers at or below 100 per cent of area median income (AMI) for properties in high-minority census areas or designated natural disaster zones.
For properties in remaining census areas, HomeReady borrowers must have an income at or below 80 per cent of AMI.
HomeReady will replace Fannie Mae’s MyCommunityMortgage. Fannie Mae confirmed that later this year it will provide online tools to help lenders determine specific income guidelines for HomeReady in their areas.