I recently had a conversation with a gentleman who was looking to purchase his first home. He had begun his home shopping process buzzing with excitement as he thought about the great new home he would purchase.
As he began looking at homes, his excitement quickly turned to angst as he realized that both his salary and his bank balances would make home shopping difficult. At one point in the conversation, he stopped and asked me directly, “How does anyone afford to purchase a home these days?”
This is a question mortgage lenders get regularly. After all, home prices have remained high and interest rates have risen. I accurately surmised that he hadn’t yet been presented with all of his mortgage loan options.
Fortunately, there are a number of programs out there that are specifically designed for a borrower with limited income, limited assets or both.
For the purposes of this article, I’m going to focus on two conforming programs offered by Freddie Mac: Home Possible and Home One. Both programs in the table below are close cousins to the traditional conforming loans we’ve all come to know and love; the difference is simply that these are designed for borrowers who may have difficulty affording a home using the traditional programs.
| Home Possible | Home One |
| 97% Loan-to-Value (only a 3% down payment required) | 97% Loan-to-Value (only a 3% down payment required) |
| Income must be 80% of area median income, or less | No income restrictions |
| Borrower may own one additional property, maximum | Owner must be a first-time homebuyer or at least three years must have passed since the last property was owned |
| Discounted interest rate pricing | Standard interest rate pricing |
| Discounted mortgage insurance pricing | Standard mortgage insurance pricing |
| Down payment may come from gift funds | Down payment may come from gift funds |
| At least one borrower must complete online homebuyer counseling education course | At least one borrower must complete online homebuyer counseling education course |
This analysis represents just the “tip of the iceberg” for mortgage loan options that help both first-time home buyers and those with limited income and/or assets. Your knowledgeable local Alpine Bank mortgage lender–from the Eagle to Pitkin to Mesa Counties–is available to discuss these mortgage possibilities and others that may be a fit for your situation, so I encourage you to reach out to one of our team members today.
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