source:
  type: guide
  id: fnma-sel-b5-6-01
  authority: Fannie Mae Selling Guide B5-6-01 — HomeReady Mortgage Loan and Borrower
    Eligibility
  description: Fannie Mae Selling Guide B5-6-01 — HomeReady Mortgage Loan and Borrower
    Eligibility.
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-6-01-full
  canonical_id: fnma-sel-b5-6-01-full
  section: Fannie Mae Selling Guide B5-6-01 — HomeReady Mortgage Loan and Borrower
    Eligibility
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B5-6-01 — HomeReady Mortgage Loan and Borrower
      Eligibility
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility (06/04/2025)
      Introduction This topic contains information on HomeReady mortgage loan and
      borrower eligibility, including: Overview General Loan Eligibility Maximum LTV,
      CLTV, and HCLTV Ratios Published May 6, 2026 792 Requirements for HomeReady
      Transactions with LTV, CLTV, or HCLTV Ratios of 95.01 – 97% Subordinate Financing
      Eligible Loan Types Temporary Buydowns Borrower Income Limits and Calculations
      Homeownership Education and Housing Counseling Overview The HomeReady mortgage
      is a conventional community lending mortgage that oﬀers underwriting ﬂexibilities
      to qualiﬁed borrowers who meet speciﬁc income criteria. The HomeReady mortgage
      is a standard product oﬀering available to all Fannie Mae lenders. No special
      approvals are required. General Loan Eligibility A HomeReady mortgage is a ﬁrst
      mortgage, purchase money, or limited cash-out reﬁnance transaction for one-
      to four-unit properties used as the borrower’s principal residence. Eligible
      properties include: one-unit properties, including manufactured housing, and
      units in condos and PUDs; units in co-ops, provided the unit conforms to Fannie
      Mae''s requirements, and the lender has received speciﬁc authority to deliver
      mortgages on co-ops to Fannie Mae; existing structures and new construction;
      and two-, three-, and four-unit properties. Additional restrictions apply to
      transactions with LTV, CLTV, or HCLTV ratios of 95.01 — 97%. See below for additional
      requirements for HomeReady mortgage transactions. Maximum LTV, CLTV, and HCLTV
      Ratios Refer to the Eligibility Matrix for maximum allowable LTV, CLTV, and
      HCLTV ratios for HomeReady mortgage loans. HomeReady loans that are originated
      in connection with manufactured homes must follow the more restrictive LTV,
      CLTV, and HCLTV ratios that apply. For example, the maximum LTV, CLTV, and HCLTV
      ratio for a one-unit HomeReady manufactured home that does not meet the MH Advantage
      requirements is 95%. Requirements for HomeReady Transactions with LTV, CLTV,
      or HCLTV Ratios of 95.01 – 97% If the LTV, CLTV, or HCLTV ratio exceeds 95%
      for a HomeReady transaction, the following requirements apply. Published May
      6, 2026 793 Criteria Requirements LTV, CLTV, or HCLTV Ratio 95.01 to 97% Note:
      The CLTV ratio can be up to 105% if the subordinate lien is a Community Seconds
      loan. Loan Purpose Purchase transactions or limited cash-out reﬁnances only.
      Existing Loan For limited cash-out reﬁnances: The lender must inform DU that
      the existing loan is owned (or securitized) by Fannie Mae using the Owner of
      Existing Mortgage ﬁeld in the online loan application before submitting the
      loan to DU. The DU message indicating the borrower''s existing loan was identiﬁed
      as a Fannie Mae loan may be relied upon as conﬁrmation the loan is owned by
      Fannie Mae. When DU is not able to identify the borrower''s existing loan is
      owned (or securitized) by Fannie Mae, the lender must provide documentation.
      Documentation may come from • the lender’s servicing system, • the current servicer
      (if the lender is not the servicer), • Fannie Mae’s Loan Lookup tool, or • any
      other source as conﬁrmed by the lender. Note: This requirement does not apply
      if the CLTV exceeds 95% only due to a Community Seconds loan. Loan Type Fixed-rate
      loans with terms up to 30 years. Note: High-balance and ARM loans are not permitted.
      Property and Occupancy One-unit principal residence. Manufactured housing is
      not permitted, unless the property meets the MH Advantage requirements. All
      borrowers must occupy the property unless there is a Community Seconds subordinate
      lien. Underwriting Method DU only Reserves Reserves requirements will be determined
      by DU. Other All other standard purchase and limited cash-out reﬁnance and HomeReady
      requirements apply. Published May 6, 2026 794 Subordinate Financing Subordinate
      ﬁnancing must comply with: the terms for the Community Seconds option, which
      allow, among other provisions, a maximum combined loan-to-value of 105% (see
      B5-5.1-01, Community Seconds Loans through B5-5.1-03, Community Seconds: Shared
      Appreciation Transactions); or subordinate ﬁnancing permitted in accordance
      with B2-1.2-04, Subordinate Financing. Subordinate ﬁnancing from a seller-held
      mortgage is not permitted with HomeReady mortgages. Eligible Loan Types HomeReady
      mortgage transactions can be secured by ﬁxed-rate or ARM loans. The following
      table identiﬁes the ARM plans that are available for HomeReady mortgage loans.
      ARM Plans Eligible for HomeReady Mortgages 30-year Five-Year ARM 4927 Seven-Year
      ARM 4928 Ten-Year ARM 4929 Temporary Buydowns The following requirements apply
      to temporary interest rate buydowns on HomeReady mortgages: Loans must be purchase
      transactions. Loans must be ﬁxed-rate or seven- or ten-year ARMs. All other
      standard buydown policies apply. See B2-1.4-04, Temporary Interest Rate Buydowns,
      for additional information. Borrower Income Limits and Calculations In determining
      whether a mortgage is eligible under the borrower income limits, the lender
      must count the income from all borrowers who will sign the note, to the extent
      that the income is considered in evaluating creditworthiness for the loan. The
      lender must use the same methodology in determining income eligibility for a
      HomeReady mortgage as the lender uses in reporting “Monthly Income” in data
      delivery. Eligibility for a HomeReady mortgage loan compares Published May 6,
      2026 795 the borrower’s income to the applicable area median income (AMI) for
      the property’s location. For determining Fannie Mae loan eligibility, lenders
      must refer to the AMIs that Fannie Mae uses in Desktop Underwriter or on Fannie
      Mae’s website and may not rely on other published versions (such as AMIs posted
      on huduser.org). To be eligible as a HomeReady mortgage, the total annual qualifying
      income may not exceed 80% of the AMI for the property’s location. If the property
      has resale restrictions, see B5-5.2-02, Loans with Resale Restrictions: Eligibility,
      Collateral and Delivery Requirements, for additional requirements. Note: For
      loan caseﬁles that are not underwritten as a HomeReady mortgage loan, DU will
      issue a message indicating that the loan may be eligible as a HomeReady loan
      if the total qualifying income entered in DU appears to be within the applicable
      AMI limit for the property’s location. See B5-6-02, HomeReady Mortgage Underwriting
      Methods and Requirements, for additional information. Homeownership Education
      and Housing Counseling Homeownership education is required for HomeReady purchase
      loans when all occupying borrowers are ﬁrst- time homebuyers. Borrowers who
      complete housing counseling within 12 months prior to loan closing may be eligible
      for a loan-level price adjustment credit. Refer to B2-2-06, Homeownership Education
      and Housing Counseling, for options for meeting these requirements. Recent Related
      Announcements The table below provides references to recently issued Announcements
      that are related to this topic. Announcements Issue Date Announcement SEL-2025-04
      June 04, 2025 Announcement SEL-2025-02 April 02, 2025 Announcement SEL-2024-04
      June 05, 2024 Announcement SEL-2022-03 April 06, 2022 Announcement SEL-2020-07
      December 16, 2020 Announcement SEL-2020-06 October 07, 2020 Announcement SEL-2020-02
      April 01, 2020 Announcement SEL-2020-01 February 05, 2020 Published May 6, 2026
      796 Announcements Issue Date Announcement SEL-2019-08 October 02, 2019 Announcement
      SEL-2019-06 July 03, 2019'
  judgment: false
