Overwhelmed by Down Payments? Freddie Mac’s BorrowSmart Program’s Got You Covered!
Saving for a down payment is a massive barrier to homeownership, especially for lower-income, first-time buyers. The money needed to purchase a home makes many people scrap their real estate goals and become lifetime renters.
Potential buyers often don’t realize there are programs available to help them succeed in the real estate market. There are even ways to conquer that overwhelming down payment. If you’re struggling to save for a down payment, Freddie Mac’s BorrowSmart Program might pave your path toward real estate success.
What Is the BorrowSmart Program?
The BorrowSmart Program, offered exclusively by Freddie Mac, provides down payment assistance to low- and very-low-income homebuyers. It is available to borrowers in all 50 states and Washington DC.
BorrowSmart Program Guidelines
As with all mortgage programs, BorrowSmart has a list of specific guidelines and eligibility requirements. If you think you might qualify, check out this info:
- The BorrowSmart Program follows all Home Possible® program guidelines.
- Only primary residence purchases are eligible.
- This program includes a 30-year fixed mortgage.
- To qualify for the BorrowSmart Program, your mortgage professional must run your information through Freddie Mac’s automated underwriting system (LPA).
- The maximum LTV is 97%. The CLTV and HCLTV cannot exceed the LTV.
- Only mortgages that fall within the conforming loan limits are eligible. High-balance loans are not permitted.
- Borrowers must participate in mortgage counseling through the Homeownership Preservation Foundation (HPF)/GreenPath.
- The borrower’s income must fall at or below 80% of the area median income (AMI).
- This program cannot be used along with other Freddie Mac assistance initiatives.
- Borrower-Paid Mortgage Insurance (BPMI) or Lender-Paid Mortgage Insurance (LPMI) are available for borrowers with a credit score under 620.
- For manufactured home purchases, only BPMI is allowed.
BorrowSmart’s Down Payment Assistance Amounts
The amount of down payment assistance available through Freddie Mac’s BorrowSmart program varies depending on the borrower’s income level. Freddie Mac breaks income levels down into two groups: low-income and very-low-income. Here’s what you need to know:
- Low-Income Purchase (LIP): Borrowers with qualifying income that ranges between 50% and 80% of the county’s AMI are eligible to receive $1,250 in down payment assistance.
- Very-Low-Income Purchase (VLIP): Borrowers with qualifying income that is less than or equal to 50% of the county’s AMI are eligible to receive $2,500 in down payment assistance.
What Does This Mean for Me?
Now that you know the eligibility requirements for Freddie Mac’s BorrowSmart Program, it’s time to find out if this program might be your ticket to homeownership. The best way to do this is to consult with a professional. At MortgageDepot, we are dedicated to helping our valued clients find the most sensible route to real estate success.
Contact one of our loan consultants to learn more about the BorrowSmart Program!