Fannie Mae HomePath mortgage: low down payment, no appraisal needed, and no PMI

Fannie Mae Homepath

The Fannie Mae Homepath loan is a defunct mortgage program which reduced the cost of purchasing a foreclosed property for either personal use, or to “flip” for profit. Homepath loans required no private mortgage insurance (PMI). Today, Fannie Mae still operates a Homepath website, on which it lists foreclosed properties for sale.

Editor's Note: The HomePath program was discontinued in October 2014. This post will not be deleted for archival purposes. For other low-downpayment mortgage programs, see our post Buy A Home With A Low Downpayment Or No Downpayment At All.

Buying a home using HomePath

Since 2006, home buyers have flocked to foreclosed homes as an inexpensive way to purchase property.

Even today, foreclosures remain popular among all buyer types including first-time home buyers, move-up buyers, and real estate investors, as well.

To help match foreclosed homes with buyers who want them, then, Fannie Mae offers a special program called HomePath. HomePath is a brand name and refers to foreclosed homes sold by Fannie Mae directly.

Fannie Mae HomePath is available in all 50 states.

What is the Fannie Mae HomePath mortgage?

The Fannie Mae HomePath program first launched in early-2009 as a way to help Fannie Mae sell homes it had reclaimed via foreclosure.

The agency is not designed to “manage properties” so the HomePath program was created to unload the thousands of homes which Fannie Mae had repossessed.

The HomePath program lets buyers buy Fannie Mae-owned homes with simpler mortgage requirements than with a traditional loan, at .

There are two distinct programs available via HomePath.

The first program is called the HomePath Mortgage. The Home Path Mortgage resembles a traditional home loan you might find from a bank.

The standard HomePath mortgage is meant for buyers who are purchasing the foreclosed property to be their primary residence; and for homes which are generally move-in ready.

The second HomePath program is called the HomePath Renovation Mortgage.

The is aimed at buyers buying a home in need of heavier work or repair; and, real estate investors doing fix-and-flip, for example.

Via HomePath Renovation, a foreclosure buyer can purchase a home and simultaneously borrow the lesser of either 35% of the home’s value-after-repairs, or $35,000. The purchase and renovation loans close simultaneously, which reduces borrower closing costs.

The benefits of a HomePath mortgage

For buyers of foreclosed homes, the Fannie Mae HomePath loan boasts several distinct advantages over other financing types such as the and .

As one example, via HomePath, lenders require just 5% down on a purchase for buyers who are purchasing a home to use as a primary residence. For investors, the minimum downpayment is just 10 percent.

These downpayment requirements are in-line with Fannie Mae’s other, non-HomePath loan programs but with one major exception — via HomePath, private mortgage insurance (PMI) is not required.

There is no PMI ever on a Fannie Mae HomePath loan.

Other unique traits of the Home Path program include :

• Home appraisals are not required
• Less-than-perfect credit is allowed — even below 660
• Buyers can accept up to 6% to offset total closing costs

Furthermore, downpayments on a HomePath Mortgage can be gifted from a family member; or, made via a grant or loan from a non-profit organization, state or local government, or employer.

As an added bonus to buyers, Fannie Mae offers a “First Look” marketing program to buyers who plan to buy a foreclosed home to make it their primary residence.

Designed to promote homeownership and neighborhood stabilization, First Look makes properties available to primary home buyers 20 days prior to real estate investors.

First Look gives primary home buyers an opportunity to buy HomePath-eligible homes without the pressure of bidding against bona fide investors.

Am I eligible for a HomePath mortgage?

As with all mortgage loans, the HomePath Mortgage requires borrowers to meet qualification standards known as “mortgage guidelines”.

For example, in order to qualify for the HomePath Mortgage, your lender will verify your income via W-2s and tax returns; your assets via bank statements; and, your credit scores via an official credit report.

Subject properties must also be marked as Fannie Mae HomePath-eligible. Your real estate agent can help you to locate participating properties.

Condominium can be non-warrantable via the HomePath Mortgage program but lenders will require the project to carry minimum insurance to protect against loss.

Interest-only mortgages are not allowed via HomePath and not all lenders will offer the HomePath Renovation Mortgage option.

If at first your loan is declined, consider re-applying with a different mortgage lender.

What are today’s Home Path mortgage rates?

For today’s buyers of foreclosed properties, consider the Fannie Mae HomePath program. Mortgage rates are low, program terms are generous, and there are thousands of eligible homes nationwide.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.