Down Payment Help in 2026: HomeReady and Home Possible
Two 3%-down conventional programs for low- and moderate-income buyers, from Fannie Mae and Freddie Mac, and how they work with gifts, grants and local assistance.
Every item cites an official source (Fannie Mae or Freddie Mac) and the date we checked it. Last checked Nov 9, 2026.
Official, in effect Quick comparison
| Topic | HomeReady (Fannie Mae) | Home Possible (Freddie Mac) |
|---|---|---|
| Minimum down | 3% (97% LTV, fixed rate, 1 unit, DU) | 3% (97% LTV, fixed rate, 1 unit) |
| Income limit | 80% of area median income | 80% of area median income |
| Occupancy | Principal residence only, 1-4 units | Primary residence only, 1-4 units |
| Homebuyer education | Required when all occupying borrowers are first-time buyers | Required when all occupying borrowers are first-time buyers |
| Down payment sources | Gifts, grants, Community Seconds; no minimum personal contribution | Gifts, grants, Affordable Seconds, sweat equity, employer help |
Sources: Fannie Mae: HomeReady · Selling Guide B5-6-01 (06/04/2025) · Fannie Mae Eligibility Matrix (Aug 5, 2026) · Freddie Mac: Home Possible · Home Possible fact sheet (Feb 2026) · Checked Nov 9, 2026
Official, in effect HomeReady (Fannie Mae)
HomeReady is a conventional loan for buyers whose total qualifying income is no more than 80% of the area median income (AMI) where the home is. It's for a principal residence: a 1-4 unit home, condo, PUD, co-op or manufactured home. Fannie Mae's 2026 AMIs took effect June 13, 2026, and lenders must use Fannie Mae's own AMI tool, not other published lists.
Fannie Mae's matrix allows up to 97% loan-to-value on a 1-unit, fixed-rate purchase run through its automated system (95% if manually underwritten). Down payment money can come from gifts, grants and Community Seconds, with no minimum from your own funds. Mortgage insurance is reduced and can be canceled later (restrictions apply).
Fannie Mae also lists a $2,500 credit for very low-income first-time buyers toward the down payment or closing costs, for loans it buys from March 1, 2025 to February 28, 2027. Ask your lender if you qualify.
Sources: Fannie Mae: HomeReady mortgage · Selling Guide B5-6-01 · Selling Guide B5-6-02 · Eligibility Matrix · Checked Nov 9, 2026
Official, in effect Home Possible (Freddie Mac)
Home Possible is Freddie Mac's low down payment loan for very low- to low-income buyers. Qualifying income is limited to 80% of AMI. It's for primary residences only, and at least one borrower must live in the home.
On a 1-unit home, a fixed-rate loan can go to 97% LTV, or up to 105% total LTV with an Affordable Second from a housing agency, nonprofit or employer program. ARMs and manufactured homes top out at 95%. For 2-4 units the limit is 95% (fixed), and you need 3% of value from your own funds above 80% LTV. A 2-4 unit purchase also needs landlord education.
Mortgage insurance on a 1-unit home can be canceled once the balance drops below 80% of the appraised value and Freddie Mac's criteria are met. The occupying borrowers can own no more than two financed homes, including this one.
Sources: Freddie Mac: Home Possible · Home Possible fact sheet (Feb 2026) · Checked Nov 9, 2026
State and local down payment assistance
Many state housing finance agencies, cities and nonprofits offer grants or second loans for down payments and closing costs. Amounts, income limits and repayment terms vary by program, so we don't list them. Both HomeReady and Home Possible can be paired with eligible assistance. A HUD-approved housing counselor can help you look for programs, and the CFPB has a housing counselor finder.
Program terms vary · check with the program and your lender · Checked Nov 9, 2026
Checklist
- Check your income against the AMI tool for the property's address, not your current one.
- Take a homebuyer education course early if every buyer is a first-time buyer.
- Tell your lender about any gift, grant or assistance before money moves.
- Buying a 2-4 unit home to live in? Ask about rental income and landlord education rules.
- Get Loan Estimates for both programs and an FHA loan, then compare total cost.
Related tools and pages
Gift funds for a down payment · FHA vs conventional (2026) · Mortgage insurance cancellation · 2-4 unit and investor rules · Seller concessions · Cash flow calculator
General information only. Not legal, tax or financial advice. RentToolkit is not a lender, law firm or financial adviser. Mortgage rules change often and lenders can add stricter rules of their own ("overlays"), so confirm with the official source and a licensed loan officer before you act.