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Chrisman's Corner: Affordability for Borrowers

JMAC’s brokers lend in many areas where affordability is an issue. Orange County is the third worst region of the country in terms of homeownership affordability. Our brokers see plenty of potential clients with little money to put down, but who very much want to buy their own home. Fortunately, JMAC offers many programs to help borrowers finance the purchase of a house when down payment funds are limited. Our brokers know that some programs are based on geography: where the home is located is important, so ask your JMAC AE about particulars.

One option in the marketplace is the Freddie Mac Home Possible program. As an example, borrowers can put as little as 3 percent down for a loan up to $417,000 with a household income limit up to $95,060 for an Orange County home, but they can’t own any other residential dwelling. Also, Freddie has a cap for add-on pricing allowing credit scores all the way down to 620. Anything less than 10 percent down allows your client lower PMI coverage compared to Freddie’s standard pricing.

HomeReady is Fannie Mae’s similar competing product. The key differences are Fannie’s income household cap is $67,900 (on Orange County properties, for example) but accessory dwelling unit income is allowed. Additionally, with 5 percent down, Fannie allows non-occupant co-borrowers.

For comparison purposes, a $425,000 condo with 5 percent down and a middle credit score of 680 results in a loan amount of $403,750. A zero point Freddie Mac Home Possible program versus standard Freddie pricing, both with PMI, the Home Possible is $63 less per month. And our brokers do their fair share of FHA loans, often ideal for borrowers with low credit scores.

Our brokers encourage their clients to pay bills on-time and work hard to improve and protect their credit. They know that a 740 or higher score will land their clients the most affordable home loan options.