Quick Guide to Fannie Mae Homepath Financing

If you've looked at foreclosure listings, it is likely you've come across Fannie Mae properties that are eligible for Homepath Financing.  But what is Homepath and what are the benefits?

First off, we need to make a distinction between the standard Homepath Mortgage program and the Homepath Renovation Mortgage.  I have not found any providers for the renovation program (EDIT!  Cornerstone Mortgage has recently become a preferred provider of Homepath Renovation Financing!  Call me for details at 314-599-0511 until I post something more specific here), so this discussion will involve just the standard Homepath product (for renovation loans, see my post on the FHA 203k program).  When looking at a listing, you'll need to find verbiage indicating that the property is eligible for the standard program and not just the renovation product.  The renovation product also uses a different graphic seen here.

If you are buying a home with the intention to live there, Homepath offers you the ability to make a small down payment of 3% and NOT pay PMI.  This sounds great, but this is NOT a unique offering.  In fact, you can obtain a normal conventional loan with a 3% down payment and not pay PMI at a lower rate than you can obtain through the Homepath program.  So, what is the advantage of Homepath?

The primary advantage of Homepath is that the loan does NOT require an appraisal.  This might not seem like a big deal at the outset, but keep this in mind - properties in any state of disrepair or with any incomplete elements are often ineligble for financing due to the findings of the appraiser.  If an appaiser notes that light fixtures aren't properly installed or that copper pipes have been removed, their report will cause your loan to be denied.  With Homepath, you can compeletely circumvent the appraisal process and finance a property that might be ineligible otherwise. 

This leads us to the other group that can take advantage of Homepath - real estate investors.  As an investor, you will need to put just 15% down, but you too can take advantage of the appraisal waiver and lack of PMI.  This can put you in a position to compete against the cash buyers that too often are the only ones eligible to purchase properties in a state of disrepair.  

If you are considering purchasing a Homepath eligible property, give me a call to discuss your scenario.  Many lenders either don't offer this program or do not understand how it works.