HomeReady Income Limits: Who Qualifies, 3% Down and How It Works on a New Home
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To get a HomeReady mortgage, your total qualifying income can be no more than 80% of the area median income (AMI) for the home's location, under Fannie Mae's Selling Guide. There is no single national number: the limit depends on where the home is, and Fannie Mae publishes it in its own AMI lookup tool. If you qualify, HomeReady allows as little as 3% down on a one-unit home, and it works on new construction.
What are the HomeReady income limits?
Fannie Mae's Selling Guide (section B5-6-01) sets one rule: the borrower's total annual qualifying income may not be more than 80% of the AMI for the property's location.
Three details trip people up:
It is based on the home's address, not where you live now. Moving across town can change your limit.
Lenders must use Fannie Mae's own AMI numbers. The Selling Guide says lenders must use the AMIs in Fannie Mae's Desktop Underwriter system or on Fannie Mae's website, not other published versions such as the ones on huduser.org.
Only the income used to qualify counts. The lender counts income from every borrower who signs the note, to the extent it is used to qualify for the loan.
You can look up any address in Fannie Mae's free AMI Lookup Tool.
How do you figure out your HomeReady income limit?
Take the AMI for the home's location and multiply it by 0.8. Then compare it with your yearly qualifying income.
Here is an EXAMPLE with made-up numbers. These are not real limits for any place. Look up your own.
EXAMPLE area median income | 80% limit for HomeReady | EXAMPLE qualifying income | Under the limit? |
|---|---|---|---|
$90,000 | $72,000 | $68,000 | Yes |
$110,000 | $88,000 | $91,000 | No |
$130,000 | $104,000 | $95,000 | Yes |
The same household can be over the limit in one area and under it in another. That is why the address matters so much.
How much do you need to put down with HomeReady?
HomeReady allows up to 97% loan-to-value on a one-unit home you will live in, which means 3% down. Fannie Mae's Selling Guide adds rules for loans above 95% LTV: the loan must be a purchase or limited cash-out refinance, a fixed-rate loan of up to 30 years, on a one-unit principal residence, underwritten in Desktop Underwriter. High-balance loans and ARMs are not allowed at that level.
For a one-unit home, Fannie Mae does not require a minimum contribution from your own funds (section B5-6-02). That means the down payment can come from other sources Fannie Mae accepts, not only your savings.
Here is an EXAMPLE on a $350,000 home:
EXAMPLE item | Amount |
|---|---|
Price | $350,000 |
3% down | $10,500 |
Loan amount (97%) | $339,500 |
Principal and interest at 7.24%, 30 years | $2,314 a month |
The 7.24% rate is the average 30-year fixed rate in Freddie Mac's Primary Mortgage Market Survey for the week of Oct. 29, 2026. Your rate will be your own. This example leaves out taxes, insurance and mortgage insurance.
Does HomeReady have cheaper mortgage insurance?
With less than 20% down, a HomeReady loan still needs mortgage insurance. But Fannie Mae asks for less coverage. Its Selling Guide (B7-1-02) sets standard coverage at 25% for a HomeReady fixed-rate loan over 20 years at 95.01% to 97% LTV. A standard loan at that same LTV calls for 35%. Less coverage can mean a lower premium, but the price comes from the mortgage insurance company. See our guide to what PMI is and when it ends.
Do you have to be a first-time buyer?
HomeReady is not only for first-time buyers. But there is a class to take. Fannie Mae's Selling Guide (B2-2-06) requires homeownership education before closing on a HomeReady purchase when all the borrowers who will live in the home are first-time buyers. The class must follow national or HUD standards. Our post on the homebuyer education course covers where to take one.
The Selling Guide also says borrowers who finish housing counseling within 12 months before closing may be able to get a loan-level price adjustment credit. Ask your lender if that applies to you.
What else does HomeReady allow?
A few features help buyers whose income comes from more than one place:
Boarder income: Rent from someone who lives with you can count, up to 30% of the income used to qualify, if that person has lived with you for 12 months and you can document the payments (B5-6-02).
Non-occupant borrowers: Someone who will not live in the home can be on the loan, within Fannie Mae's rules.
Cash on hand: For one-unit homes, cash you have saved at home can be a source of funds, with documentation.
HomeReady vs. Home Possible: what is the difference?
Freddie Mac's Home Possible loan is the closest match. Freddie Mac also caps qualifying income at 80% of AMI and offers a 3% down payment. The two programs have their own lookup tools and their own fine print, so ask a lender to run you through both. If you are also weighing a government loan, our FHA vs. conventional loan post lays out the main differences.
What this means for new-construction buyers
The Selling Guide lists "existing structures and new construction" as eligible properties. So HomeReady can work on a brand-new home. A few things are worth knowing before you sign with a builder:
Builder credits have a cap. Fannie Mae limits financing concessions from interested parties, such as a builder, to 3% of the price or appraised value (whichever is lower) when the LTV is above 90%. On the $350,000 example, that is $10,500. Anything over the cap gets treated as a sales concession and comes off the price. Our post on seller concession limits explains how that works.
Temporary buydowns are allowed, with rules. Fannie Mae allows temporary rate buydowns on HomeReady purchases if the loan is fixed-rate or a seven- or ten-year ARM. See how a 2-1 buydown works.
Check the limit for the new home's address. A new community may sit in a different area than the place you rent now.
Tell your lender if your income changes during the build. Eligibility is based on the qualifying income used for the loan, so a raise while the home is being built is worth raising with your lender early.
Builders' offers change often. Call 561-704-0091 for today's numbers on any community you are looking at.
Common Questions
What is the income limit for a HomeReady loan?
Your total qualifying income can be no more than 80% of the area median income for the home's location. Fannie Mae publishes the numbers in its AMI Lookup Tool, and lenders must use those numbers.
Is HomeReady only for first-time buyers?
No. Repeat buyers can use HomeReady too. If all the borrowers who will live in the home are first-time buyers, at least one must complete homeownership education before closing.
How much down payment does HomeReady need?
As little as 3% on a one-unit home you will live in. Loans above 95% loan-to-value must be fixed-rate loans of up to 30 years and must be underwritten in Fannie Mae's Desktop Underwriter.
Can I use a HomeReady loan on a new-construction home?
Yes. Fannie Mae's Selling Guide lists new construction as eligible. Builder credits are capped at 3% of the price or appraised value, whichever is lower, when you put less than 10% down.
Does HomeReady require mortgage insurance?
Yes, when you put less than 20% down. Fannie Mae requires less coverage on HomeReady loans, such as 25% instead of 35% on a 30-year fixed loan at 95.01% to 97% LTV.
What is the difference between HomeReady and Home Possible?
HomeReady is Fannie Mae's program and Home Possible is Freddie Mac's. Both cap qualifying income at 80% of the area median income and allow 3% down, but each has its own rules and lookup tool.
Ready to take the next step?
Call 561-704-0091 to talk with a National House Search specialist, or Schedule a visit.
Related reading: How Much Is a Down Payment on a House? · Do I Need a Homebuyer Education Course? · FHA vs. Conventional Loan
This is general information, not financial, tax or legal advice. Figures checked November 2, 2026.