HomePath is Fannie Mae’s exclusive program that allows a homebuyer to purchase a Fannie Mae foreclosed home with as little as a 3% down payment. One of the biggest benefits of this program is the ability to put down just 3% down while avoiding paying mortgage insurance!
HomePath program benefits include:
- No appraisal necessary
- no mortgage insurance
- A down payment of only 3% is required
- Seller contributions of up to 6% of the purchase price
- Owner-occupied, second homes, and investment properties permitted
Here’s a look at each of these benefits one by one:
Appraisal exemption
The HomePath program states that an evaluation is not necessary. Since Fannie Mae already owns the property and will also have a loan that the new buyer will get, they are allowed to make their own rules. Avoiding the appraisal means the buyer avoids the approximately $400 an appraiser will charge for her service; however, critics claim that it puts the buyer at a disadvantage since they do not get an independent third-party opinion of the home’s value. Of course, the buyer can choose to pay an appraisal if he wishes, but it is not required.
No Mortgage Insurance
A typical home loan requires mortgage insurance if the buyer is putting down less than 20% down. Mortgage insurance insures the lender and not the homeowner. So avoiding paying the monthly or upfront mortgage insurance premiums associated with most small down payment loans can offer potential homebuyers big savings.
3% down payment
The HomePath program has the lowest down payment requirements for an owner-occupied property of any conventional loan available on the market today. FHA loans require a minimum of 3.5% down and traditional conforming loans require at least 5%.
Seller Contributions
The HomePath program allows Fannie Mae to offer an allowance of up to 6% toward closing costs. This money can be used to pay all third-party fees, allowing the homebuyer to use their funds for a down payment only. **Special Newsletter** Fannie Mae Offers 3.5% Closing Costs On ALL HomePath Loans Closed Before June 30, 2011
Second Home and Investment Properties
HomePath is available to those looking to purchase a second home, invest in a rental property, and those purchasing a primary residence. Down payment requirements may vary by occupancy, but the requirements are less stringent than conventional financing for all occupancy types.
It’s important to note that not all lenders can offer a HomePath mortgage. Be sure to request an upfront certified mortgage broker who is approved by Fannie Mae to close HomePath loans.