Home Possible Mortgage

Updated 2026-05-18

The Home Possible® mortgage program is an affordable housing initiative offered by Government Sponsored Enterprise (GSE) Freddie Mac, designed to help eligible borrowers achieve homeownership, particularly first-time homebuyers. It aims to make homeownership more accessible for very low to low-income borrowers by offering flexible qualification criteria, removing common barriers, and providing cost savings, primarily through reductions in credit fees.

Key Features and Benefits

• Low Down Payment & Maximum Loan-to-Value (LTV): Allows for a down payment as low as 3% of the purchase price, with a maximum LTV of 97%.
• Flexible Sources of Funds: Down payment and closing costs can come from gifts, grants, and other flexible sources. There is no minimum borrower contribution required from personal funds, directly supporting Down Payment and Closing Cost Assistance and Down Payment Assistance efforts.
• Credit Fee Reduction: A significant benefit of Home Possible is the reduction or elimination of "Special Attributes" credit fees. This can lead to substantial savings on the total cost of fees for eligible mortgages. Standard risk-based credit fees are waived, though a custom MI credit fee in price will still apply. This is a form of Waived Risk-Based Credit Fees.
• Mortgage Insurance (MI) Coverage & Cancellation: Standard MI coverage requirements, such as 35%, apply. Borrowers may cancel mortgage insurance when eligible, reducing monthly payments and potentially saving thousands over the life of the loan.
• Non-Occupying Borrowers: Permits co-borrowers who will not reside in the property for one-unit homes, which can help borrowers with insufficient income qualify. See Borrower (Consumer).
• Rental Proceeds as Qualifying Income: Allows income from boarders or renters in the subject property to be used for mortgage qualification, increasing borrowing capacity. See Fannie Mae Forms 1007 and 1025 (Rental Income Documentation and Calculation).
• Ownership of Another Property: Borrowers are permitted to own another property at the time of closing, offering flexibility for move-up buyers or those retaining existing homes. See Ownership of Other Property Mortgage Qualification.
• Financial Literacy Education: Provides financial literacy education for borrowers new to homeownership to promote responsible homeownership. This aligns with Financial Literacy and Housing Counseling and homeownership-education initiatives.

Eligibility Considerations

While specific criteria may vary, common eligibility factors include:

• Being a Borrower (Consumer).
• Meeting specific AMI thresholds. Examples in Freddie Mac guidance show eligibility for borrowers at 49% and 70% of AMI.
• Satisfying credit score requirements (e.g., a 720 credit score was used in illustrative examples).

The program's structure, particularly its fee reductions and flexible qualification, makes it an attractive option for borrowers who meet the income and other qualifying criteria.

Specific Credit Fee Incentives

Freddie Mac offers specific incentives, such as the "Home Possible VLIP Mortgages Credit for Credit Fees," which provides a credit to reduce or eliminate certain credit fees. This particular credit was effective for mortgages with settlement dates on or after March 1, 2025, and on or before February 28, 2026. This credit specifically targets and reduces the "Special Attributes" credit fees, which are distinct from "Base Grid" credit fees.

Product Specifications

• Loan-to-Value (LTV): Up to 97% LTV.
• Total Loan-to-Value (TLTV): Up to 105% TLTV when combined with Affordable Seconds®.
• Transaction Types: Available for purchase and no cash-out refinancing.
• Occupancy: Must be an owner-occupied primary residence.
• Loan Types: Can accommodate fixed-rate and certain adjustable-rate mortgages (ARMs), subject to associated LTV/TLTV/HTLTV requirements.
• Conforming Limits: Can include super conforming mortgages (with additional restrictions).
• Eligible Property Types: Includes condos, planned unit developments (PUDs), and manufactured homes (all with additional restrictions).

Lender Advantages

Lenders offering Home Possible mortgages benefit from:

• Competitive Pricing: Standard risk-based credit fees are waived, though a custom MI credit fee in price will still apply.
• Expanded Market Opportunity: Accommodates a wide range of borrowers, from first-time homebuyers to move-up buyers and retirees.
• Streamlined Workflow: Integration with Freddie Mac GatewaySM, a single-entry point for accessing Freddie Mac tools, aims to streamline the mortgage lifecycle.

Related Renovation Loan Options

While Home Possible focuses on purchase and no cash-out refinancing, Freddie Mac also offers the CHOICERenovation loan, which is a type of Renovation Loan that allows for financing renovations. This is similar to Fannie Mae's HomeStyle Renovation Loan. These renovation loans allow borrowers to finance the purchase or refinance of a home and include the costs of renovations, repairs, or improvements into a single loan, eliminating the need for a separate construction loan or personal loan for home improvements.