An overview of Fannie Mae's Homeready home loan program. This is an excerpt from Fannie Mae's gracious presentation at the 2017 NAIHBR Chicago area leadership summit.

1. HomeReady®
Mortgage
An Overview for
Mortgage Professionals

2. © 2017 Fannie Mae. Trademarks of Fannie Mae. 28/15/2017
An important note about the seminar content
While every effort has been made to ensure the reliability of the session
content, Fannie Mae’s Selling and ServicingGuides and their updates,
including GuideAnnouncements and Release Notes, are the official
statements of Fannie Mae’s policies and procedures and control in the event
of discrepancies between the information in this seminar and the Guides.

3. © 2017 Fannie Mae. Trademarks of Fannie Mae. 38/15/2017
HomeReady overview
Designed for creditworthy low- to moderate-income borrowers, with
expanded eligibilityfor financing homes in low-income communities.
HomeReady lets you lend with confidence while expanding access to
credit and supporting sustainable homeownership.
 Simplicity and certainty for lenders
 Favorable pricing and conventional ease
 Product features align with today’s buyer demographics and
needs

4. © 2017 Fannie Mae. Trademarks of Fannie Mae. 48/15/2017
Borrower benefits
Affordable and sustainable
 Affordable, low down payment; up to 97% financing for home
purchase with many borrower flexibilities.
 Flexible sources of funds can be used for the down payment and
closing costs with no minimum contribution required from the
borrower’s own funds (1-unit properties).
 Conventional home financing with cancellable monthly MI (per
Servicing Guide policy); reduced MI coverage requirement above
90% LTV supports competitive borrower payment.
 Sustainable with the online Framework course to help buyers get
ready to buy a home and be prepared for the responsibilitiesof
homeownership.

5. © 2017 Fannie Mae. Trademarks of Fannie Mae. 58/15/2017
Simple borrower income eligibility
May assist lenders in meeting applicable Community Reinvestment Act goals.
Borrower Income Eligibility Limit Area
No income limit Properties in low-income census tracts
100% of area median income All other properties

6. © 2017 Fannie Mae. Trademarks of Fannie Mae. 68/15/2017
HomeReady Income Eligibility Lookup tool
The tool provides lenders with a
quick and easy way to look up
HomeReady income eligibility by
property address or by FIPS code.
Access ondesktop or mobile
devices from the HomeReady
page: https://www.fanniemae.com/
homeready

7. © 2017 Fannie Mae. Trademarks of Fannie Mae. 78/15/2017
Product features
 DU automaticallyidentifies potentially eligible loans.
 Underwriting flexibilities include:
 Allows non-occupant borrowers, such as a parent.
 Permits rental income from an accessory dwelling unit.
 Allows boarder income (updated guidelines provide
documentation flexibility).

8. © 2017 Fannie Mae. Trademarks of Fannie Mae. 88/15/2017
Product features (continued)
 Financing up to 97% LTV (DU is required for LTV ratios > 95%) for
purchase of one-unit principal residence.
 Borrower is not required to be a first-time buyer.
 Limited cash-out refi (LCOR) up to 95%; LCOR LTV up to 97%
FRM in DU only for loans owned or securitized by Fannie Mae
 Lower MI requirement than standard (25% for LTV
ratios > 90% to 97%).
 Allows for nontraditional credit.
 Gifts, grants, CommunitySeconds®, and cash-on-hand permitted
as a source of funds for down payment and closing costs.
 Supports manufactured housing up to 95% LTV and HomeStyle®
Renovation (approved lenders) to 95% LTV.

9. © 2017 Fannie Mae. Trademarks of Fannie Mae. 98/15/2017
Non-occupant borrowers
Non-Occupant
Borrowers
The consideration of a non-occupant borrower’s income,
assets, credit and liabilities permitted for qualifying:
 DU: maximum 95% LTV
 Manual:90% LTV with max 43% DTI for occupying
borrower
Income considered part of qualifying income and subject to
HomeReadyincome limits
Ownership of
Other Property
Borrower(s) may have an ownership interest in other residential
property at the time of closing.

10. © 2017 Fannie Mae. Trademarks of Fannie Mae. 108/15/2017
Boarder income and rental income
1-Unit 2- to 4-Unit
Boarder
Income
Boarder income (relatives or non-
relatives):
 Up to 30% of qualifying income
 Documentation required:
• Shared residency for the
most recent 12-month period.
• Boarder income for at least 9
of the most recent 12 months
(averagedover 12 months).
Not eligible
Rental Income Rental income from a 1-unit property
with an accessory unit may be used
as qualifying income.
Rental income from 2- to
4-unit property may be
used as qualifying
income.

11. © 2017 Fannie Mae. Trademarks of Fannie Mae. 118/15/2017
Homeownership education requirement
One borrower on each HomeReady purchase loan must fulfill the
homeownership education requirement. The Framework homeowner-
ship education course is the simplest, most convenient way for most
home buyers to fulfill the requirement.
Exceptions
1. HomeReady loans that involve a Community Seconds® or down payment
assistance program
2. If a borrower has a lack of Internet access or other circumstances that make an
online course unsuitable, Framework can refer the borrower to HUD-approved
counseling agency.
3. Borrowers who have already completed one-on-one housingcounseling are
not required to complete the Framework course. Counselingshould occur as
early as possible. Required components of counseling must be completed
before a buyer enters into a contract to purchase a home.

12. © 2017 Fannie Mae. Trademarks of Fannie Mae. 128/15/2017
DU Version 10.1 impacts to HomeReady
Effective the weekend of July 29, 2017
Simpler, more certain underwritingguidelines, will help lenders serve their
borrowers with fewer manual processes:
 For loan casefiles underwritten through DU Version 10.1, the maximum
allowable DTI ratio will be adjusted to consider applications with a DTI ratio up
to 50%. As a result, the non-borrower household income flexibility will be
retired and completion of housing counselingwill no longer be considered a
compensatingfactor.
Other changes impacting HomeReady include:
 Maximum LTV ratios for adjustable-rate mortgages (ARMs) aligned with those
for fixed-rate mortgages, up to 95%
 Less tax return documentation required with DU underwriting for many self-
employed borrowers

13. © 2017 Fannie Mae. Trademarks of Fannie Mae. 138/15/2017
HomeReady summary
Grow your business. Close more loans.
Competitive
 Standardrisk-basedpricing waivedforLTVs
>80% with a credit score >=680
 Competitive borrowerpayment
 Execution always betterthanorequal to our
standardpricing
Simple
 Easy income eligibility
 DU automatically identifies borrowereligibility
 Delivery with standardloans
Smart
 Homeownership educationvia online Framework
course
 Access to post-purchase HUD-approved
homeownership advisors
 Options forborrowers who needspecializedhelp
Features
Eligibility
 Financing up to 97% LTV (DU only)
 Manufacturedhousing to 95% (DU only)
 HomeStyle® Renovation to 95% (requires
lenderapproval)
Income flexibilities
 Non-occupant borrowers
 Rental income from accessory units (1-unit
property)
 Boarderincome documentationflexibility

14. © 2017 Fannie Mae. Trademarks of Fannie Mae. 148/15/2017
Visit our HomeReady mortgage page
Go to fanniemae.com/homeready:
 Fact sheets, product comparison, and FAQs
 Income flexibility details for rental and boarder
income and non-occupant borrowers
 Income eligibility lookup tool and census tract
spreadsheet
 Free customizable HomeReady marketing
materials at our Marketing Center
 Framework online learning information
 Link to the Down Payment Resource (third-
party website)

15. © 2017 Fannie Mae. Trademarks of Fannie Mae. 158/15/2017