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Freddie Mac HomeOne
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Homebuyers who have a high income, but also low savings, may be able to buy a home with just 3% down if they qualify for the Freddie Mac HomeOneⓇ mortgage. Unlike other low-down-payment, conventional first-time homebuyer programs, there are no income limits. We’ll explain how the HomeOne mortgage works — as well as compare it to other first-time buyer loans — to see if it’s the right fit for your home purchase or refinance needs.
What is the Freddie Mac HomeOne mortgage?
The Freddie Mac HomeOne mortgage is a low-down-payment program for first-time homebuyers with guidelines set by the Federal Home Loan Mortgage Corporation (FHLMC), more commonly known as Freddie Mac. Eligible buyers can purchase homes with only 3% down payment, regardless of income or buying location.
Cash-strapped buyers can purchase one-unit homes with conforming loan limits up to $647,200 in most parts of the country. Buyers purchasing expensive homes in high-cost areas of the U.S. may be eligible for loan amounts as high as $970,800, which is the maximum high-cost conforming limit in 2022.
The HomeOne mortgage can also be used to refinance a home, as long as no cash is taken out. There is a drawback, however: The loan being refinanced must also be a Freddie Mac-serviced loan. Homeowners can use the Freddie Mac Loan Look-Up Tool to verify this information.
How the HomeOne mortgage works
Getting a HomeOne mortgage is similar to getting any other first-time homebuyer loan.
You’ll need to apply with a lender that offers the program. Most lenders offer both Fannie Mae and Freddie Mac loan programs. However, make sure to check with your loan officer if you apply specifically for the HomeOne mortgage.
You may need to take a homebuyer education course. If you’re a first-time homebuyer buying on your own, you’ll need to take an approved homebuyer education course. You can skip the course if at least one co-borrower has owned a home before.
You’ll provide income, asset and credit documentation. Lenders vet your paystubs, W-2s and bank statements, and will need to verify a valid credit score that meets the program requirements.
You’ll need to pay mortgage insurance. The mortgage insurance premiums for the HomeOne mortgage are slightly higher than the Freddie Home Possible® loan. Mortgage insurance covers lender losses if you can’t make payments and go into mortgage default.
You can only take out a fixed-rate mortgage. Adjustable-rate mortgages (ARMs) aren’t permitted.
HomeOne eligibility requirements
Although the HomeOne program allows higher-income earners to qualify for the program, there are some added restrictions that come with that flexibility. The table below shows the minimum mortgage requirements for the HomeOne program.
| Type of requirement | HomeOne guideline |
|---|---|
| First-time homebuyer | At least one borrower must have had no ownership in a residential home in the last three years |
| Occupancy | All borrowers must live in the home as their primary residence |
| Eligible properties | 1-unit homes Planned unit developments Condominiums |
| Down payment | 3% |
| Credit score | At least one borrower must have a usable credit score of at least 620 |
| Debt-to-income (DTI) ratio | The total debt compared to verified gross income can’t exceed 45% |
| Homeownership education | Required if all borrowers are first-time homebuyers |
| Home appraisal | Required for all HomeOne purchases and refinances |
HomeOne income limits
The Freddie Mac HomeOne program doesn’t set any limits on income. It’s a good option for borrowers who only have a 3% down payment and earn more than the median income requirements set for the Fannie Mae HomeReady® or Freddie Mac Home Possible programs.
Pros and cons of a HomeOne mortgage
| Pros | Cons |
|---|---|
| You won’t be subject to income limits | You or a co-borrower must be a first-time homebuyer |
| You only need a 3% down payment | You can’t purchase a second home or investment home |
| You won’t be subject to location restrictions | You can’t purchase a manufactured or multifamily home |
| You can leave more cash in the bank for home repairs or an emergency fund | You’ll pay slightly higher mortgage insurance premiums than other first-time homebuyer programs |
HomeOne vs. Home Possible
Freddie Mac offers another 3% down payment loan program: the Freddie Mac Home Possible loan. The Home Possible program is designed for lower-income borrowers and gives more flexibility for the types of properties you can buy. Below is a side-by-side glance at the biggest differences between the two programs.
| HomeOne | Freddie Mac HomePossible |
|---|---|
| No income limits | Income limits vary depending on location |
| Only one-unit homes permitted | Multifamily (two to four units) and manufactured homes allowed |
| Fixed-rate loan options only | Adjustable-rate loan options available |
Alternatives to a Freddie HomeOne mortgage
There are several other loan programs to consider besides the Freddie HomeOne mortgage. Below is a brief description of each.
Fannie 97%. This 3% down payment program is offered by Fannie Mae, which is a government-sponsored enterprise (GSE) similar to Freddie Mac. Like the HomeOne program, there are no income limits.
Fannie Mae HomeReady. The HomeReady program is similar to Freddie Mac’s Home Possible program, with a 3% down payment requirement and income limits for qualified borrowers.
FHA loans. The Federal Housing Administration (FHA) insures loans for borrowers with scores as low as 580, requiring only a 3.5% down payment. There are no income limits, but borrowers pay two types of mortgage insurance (conventional loans only require one type of mortgage insurance).
VA loans. Eligible military borrowers can purchase a home with no-down-payment financing backed by the U.S. Department of Veterans Affairs (VA). No mortgage insurance is required.
USDA loans. Low-income borrowers purchasing homes in designated rural areas may qualify for a no-down-payment loan backed by the U.S. Department of Agriculture (USDA).
The table below shows you how the HomeOne loan guidelines stack up against the alternatives listed above.
| Loan requirement | HomeOne | Fannie 97% | HomeReady | FHA loan | VA loan | USDA loan |
|---|---|---|---|---|---|---|
| Down payment | 3% | 3% | 3% | 3.5% | 0% | 0% |
| First-time homebuyer required | Yes | No | Yes | No | No | No |
| Income limits | No | No | Yes | No | No | Yes |
| Credit score minimum | 620 | 620 | 620 | 580 | No guideline minimum | No guideline minimum |
| Loan limits | $647,200 for most areas | $647,200 for most areas | Based on area median income limits | $420,680 for most areas | No | Based on USDA income limits |
| Property type limits | Yes | Yes | No | No | No | No |