Quick answer
HomeReady is Fannie Mae’s conventional mortgage for borrowers whose total qualifying income is no more than 80% of the area median income (AMI). It allows a loan-to-value ratio up to 97% on a one-unit principal residence — a 3% down payment — and you don’t have to be a first-time buyer.
Key facts
What sets it apart
- Income cap, not a buyer test. Only the qualifying income of the borrowers counts, checked against Fannie Mae’s AMI figures for the property’s location. Where AMI is $100,000, qualifying income can be at most $80,000.
- Flexible down payment money. Gifts, grants and down-payment assistance seconds are allowed; with a Community Seconds loan the combined LTV can reach 105%.
- Education. If every occupying borrower is a first-time homebuyer, at least one must complete a homeownership education course before a purchase.
- Uses. Purchases and limited cash-out refinances of one- to four-unit principal residences.
You still pay private mortgage insurance with less than 20% down, and it can be cancelled like on other conventional loans. The first-time buyer programs guide compares HomeReady with other options.
Related terms
- Home Possible, Freddie Mac’s counterpart
Sources
- Fannie Mae Selling Guide B5-6-01 — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025)
- Fannie Mae Eligibility Matrix — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026)
- Fannie Mae Selling Guide B5-5.1-02 — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.