An overview of Colorado First Time Home Buyer Programs

Fannie Mae One+

Benefits and Limitations

Fannie Mae ONE+ product has the following benefits:

• Minimum 1% down payment
• 2% Grant from Rocket Mortgage
• No Mortgage Insurance paid by client
• No investor Loan Level Pricing Adjustments

Fannie Mae ONE+ product has the following limitations:

• Area Median Income (AMI) Requirements (80%)
• Max loan amount $350,000

Ineligible Loans

• Refinance
• ARM
• High Balance
• Second home and investment properties

Down Payment Assistance

ONE+ offers a down payment assistance grant of 2% of the purchase price.

Minimum Client Contribution

• 1 unit primary residence: No minimum client contribution is required.

Geographic Eligibility

This affordable product is not limited to specific areas.

Client Eligibility

• The loan must be a purchase.
  • Refinance transactions are not allowed.
  • Maximum LTV is 97%.
  • Minimum LTV is 95.01% for non-manufactured homes.
    • Manufactured homes must be 95% LTV exactly.
• The client can be a first-time homebuyer, but it is not required for eligibility.
• A Non-Occupant Co-Client is not allowed.

Qualifying Income Limits

Total qualifying income (on an annual basis) of all client’s income used to qualify on the loan must be less than or equal to 80% of the Area Median Income (AMI).

• If the income on the loan is greater than 80% of the AMI, DU will issue an ineligible recommendation.
• If the net and gross income has been obtained for one income type, the gross income must be used to qualify.
• Example: Client receives a base income and bonus income If the client qualifies with only the base income, the bonus income does not need to be included.
• Use the Fannie Mae Tool to determine if the subject property is in an underserved area by searching the subject property address.
  • If no limit is listed, area is underserved.

To qualify the income, verify the total needed to meet the DTI.

If using employment income, base income must be used and income limits must still be met.

Property Eligibility

ONE+ allows clients to finance one additional residential property, however the subject property must be a primary residence. Standard properties are allowed.

Subordinate financing is only allowed when the client is using Second Lien Down Payment Assistance for a purchase transaction. CLTV can go up to 105%, but LTV cannot be below 95.01% for standard properties and 95% for manufactured homes.

Landlord Counseling is not required for eligibility.

Property valuations are eligible for an Appraisal Waiver.

• If the property is not eligible, a full appraisal is required to be eligible.

The following unit types must fall within a certain LTV range:

• 1 Unit properties other than manufactured homes must be between 97% and 95.01% LTV.
• 1 Unit manufactured homes must be exactly 95% LTV.

The following are not considered residential property:

• Vacant land
• Unattached mobile home
• Timeshare
• Commercial property

For all other property eligibility, standard Fannie guidelines apply.

Rental Income

Rental income from an Accessory Unit on a subject 1-unit primary residence is eligible income.

• Boarder Income requirements must be met to use the income.

Boarder income is eligible with all of the following:

• Boarder has been living with the client in the client’s primary residence for the most recent 12 months.
• Evidence with 12 months canceled checks or bank statements.
• Boarder can show proof of shared residency.
  • Example: Driver’s license
• Up to 30% of a client's qualifying income can come from boarder income.
• Boarder is not obligated on the mortgage or has ownership interest in the property.
• Boarder income is from a 1 unit property.

Income must be averaged over the amount shown on the 12 months canceled checks or bank statements.

Fannie Mae HomeReady

Benefits and Limitations

Fannie’s HomeReady product has the following benefits:

• Lower Mortgage Insurance Rates
• No investor Loan Level Pricing Adjustments

Fannie’s HomeReady product has the following limitations:

• Area Median Income (AMI) Requirements

Ineligible Products

All of the following are not eligible under HomeReady:

• Cash out refinance
• ARM
• High Balance loans with LTV greater than 95%
• 2Second home and investment properties

Down Payment Assistance

This affordable product does not offer any assistance toward down payment.

Minimum Client Contribution

Minimum client contribution is based on property type:

• 1 unit primary residence: No minimum client contribution is required.
• 2-4 unit primary residence: If the LTV is greater than 80%, then the client must contribute 3% of their own funds, based on the lesser of the purchase price or appraised value.

Down payments can be a gift.

Geographic Eligibility

This affordable product is not limited to specific areas.

Client Eligibility

• The loan must be a purchase or rate and term refinance.
  • Cash out transactions are not allowed.
  • Financing must be up to 97% LTV.
    • Rate and term refinances with LTV between 95.01% and 97% must be owned by Fannie Mae.
• The client can be a first-time homebuyer, but it is not required for eligibility.

A Non-Occupant Co-Client is allowed if the LTV is less than or equal to 95% and can own other properties.

Qualifying Income

Total qualifying income (on an annual basis) of all client’s income used to qualify on the loan must be less than or equal to 80% of the Area Median Income (AMI).

• If the income on the loan is greater than 80% of the AMI, DU will issue an ineligible recommendation.
• If the net and gross income has been obtained for one income type, the gross income must be used to qualify.
• Example: Client receives a base income and bonus income If the client qualifies with only the base income, the bonus income does not need to be included.
• Use the Fannie Mae Tool to determine if the subject property is in an underserved area by searching the subject property address.
  • If no limit is listed, area is underserved.

To qualify the income, verify the total needed to meet the DTI.

If using employment income, base income must be used and income limits must still be met.

Property Eligibility

HomeReady allows clients to finance one additional residential property, however the subject property must be a primary residence. Standard properties are allowed.

Subordinate financing is only allowed when the client is using Second Lien Down Payment Assistance for a purchase transaction. CLTV can go up to 105%.

Landlord Counseling is not required for eligibility.

Property valuations are eligible for an Appraisal Waiver/PIW or ACE.

• If the property is not eligible a full appraisal is required to be eligible.

The following unit types must fall within a certain LTV range:

• 1 Unit: 97% LTV
• 2 Unit: 85% LTV
• 3-4 Unit: 75% LTV

The following are not considered residential property:

• Vacant land
• Unattached mobile home
• Timeshare
• Commercial property

For all other property eligibility, standard Fannie guidelines apply.

Rental Income

Rental income from an Accessory Unit on a subject 1-unit primary residence is eligible income.

• Boarder Income requirements must be met to use the income.

Boarder income is eligible with all of the following:

• Boarder has been living with the client in the client’s primary residence for the most recent 12 months.
• Evidence with 12 months canceled checks or bank statements.
• Boarder can show proof of shared residency.
  • Example: Driver’s license
• Up to 30% of a client's qualifying income can come from boarder income.
• Boarder is not obligated on the mortgage or has ownership interest in the property.
• Boarder income is from a 1 unit property.

Income must be averaged over the amount shown on the 12 months canceled checks or bank statements.

Qualifying Income

Total qualifying income (on an annual basis) of all client’s income used to qualify on the loan must be less than or equal to 80% of the Area Median Income (AMI).

• If the income on the loan is greater than 80% of the AMI, LPA will issue an ineligible recommendation. The message “ET” indicates the income is too high.
• If the net and gross income has been obtained for one income type, the gross income must be used to qualify.
• Example: Client receives a base income and bonus income. If the client qualifies with only the base income, the bonus income does not need to be included.

Search the subject property address in Freddie Mac’s Home Possible Eligibility Tool to determine the area median income limit.

If using employment income, base income must be used and income limits must still be met.

Property Eligibility

BorrowSmart allows clients to finance one additional residential property, however the subject property must be a primary residence.

• Free and clear properties are not included in the property count.
• The subject property may be a 2-4 unit property.

Subordinate financing is only allowed when the client is using Second Lien Down Payment Assistance for a purchase transaction. CLTV can go up to 105%.

Landlord counseling is required for 2-4 unit purchase transactions only.

• Only one client on the loan must take and complete the course prior to closing for eligibility.
• A copy of the completion certification must be on the loan file.
  • Click here for the landlord education test.

Property valuations are eligible for an Appraisal Waiver/PIW or ACE.

• If the property is not eligible a full appraisal is required to be eligible.

The following are not considered residential property:

• Vacant land
• Unattached mobile home
• Timeshare
• Commercial property

For all other property eligibility, standard Freddie guidelines apply.

Down Payment Assistance

The client is eligible to receive the following grants based on their income:

• $2,500 grant applied when client’s qualifying income is less than or equal to 50% of the area median income
• $1,250 grant applied when the client’s qualifying income is between 50.01% and 80% of the area median income

Freddie Mac HomePossible

Freddie’s Home Possible product has the following benefits:

• Lower Mortgage Insurance Rates
• No investor Loan Level Pricing Adjustments

Freddie’s Home Possible product has the following limitation:

• Area Median Income (AMI) Requirements

Ineligible Loans

All of the following loan types are not eligible:

• Cash out refinance
• ARM
• High Balance
• Second home and investment properties

Down Payment Assistance

This affordable product does not offer any assistance toward down payment.

Minimum Client Contribution

Minimum client contribution is based on property type:

• 1 unit primary residence: No minimum client contribution is required.
• 2-4 unit primary residence: If the LTV is greater than 80%, then the client must contribute 3% of their own funds, based on the lesser of the purchase price or appraised value.

Gift funds and gifts of equity are allowed as a down payment after the minimum client contributions have been met.

Geographic Eligibility

This affordable product is not limited to specific areas.

Client Eligibility

• The loan must be a purchase or rate and term.
  • Cash out transactions are not allowed.
  • Financing can be up to 97%.
• Client can be a first-time homebuyer, but it is not required for eligibility.
• The loan does not have to be owned by Freddie Mac.

Non-Occupying clients are allowed with an LTV up to 95% and can own other properties. However, 2-4 unit properties are not allowed.

Qualifying Income

Total qualifying income (on an annual basis) of all client’s income used to qualify on the loan must be less than or equal to 80% of the Area Median Income (AMI).

• If the income on the loan is greater than 80% of the AMI, LPA will issue an ineligible recommendation. The message “ET” indicates the income is too high.
• If the net and gross income has been obtained for one income type, the gross income must be used to qualify.
• Example: Client receives a base income and bonus income. If the client qualifies with only the base income, the bonus income does not need to be included.

• Use the Freddie Mac Tool to determine if the subject property is in an underserved area.

Search the subject property address in Freddie Mac’s Home Possible^® Eligibility tool to determine the appropriate income limit.

If using employment income, base income must be used and income limits must still be met.

Property Eligibility

Home Possible^® allows clients to finance one additional residential property, however the subject property must be a primary residence.

• Free and clear properties are not included in the property count.
• The subject property may be a 2-4 unit property.

Subordinate financing is only allowed when the client is using Second Lien Down Payment Assistance for a purchase transaction. CLTV can go up to 105%.

Landlord counseling is required for 2-4 unit purchase transactions only.

• Only one client on the loan must take and complete the course prior to closing for eligibility.
• A copy of the completion certification must be on the loan file.

Property valuations are eligible for an Appraisal Waiver/PIW or ACE.

• If the property is not eligible a full appraisal is required to be eligible.

The following are not considered residential property:

• Vacant land
• Unattached mobile home
• Timeshare
• Commercial property

For all other property eligibility, standard Freddie guidelines apply.