HomeReady, Home Possible and HomeOne all allow 3% down, but the income limits, first-time buyer rules, property types and underwriting differ. Here’s how they compare and how to check an address’s AMI.
HomeReady, Home Possible and HomeOne are all conventional loans that can work with as little as 3% down. That shared 3% is where the similarity ends. HomeReady (Fannie Mae) and Home Possible (Freddie Mac) are built for borrowers whose qualifying income is at or under 80% of area median income (AMI) for the property’s location. HomeOne (Freddie Mac) has no income limit, but on a purchase at least one borrower has to be a first-time homebuyer. Which one fits depends on your income, the address, the property and how the loan underwrites.
This guide compares the three side by side using Fannie Mae’s and Freddie Mac’s own product pages, fact sheets and Selling Guide, checked on November 7, 2026. The agencies’ guides control. Individual lenders can add stricter rules (called overlays), so the final word on your file comes from the lender’s underwriting, not from a summary.
The quick comparison
Who it’s aimed at: HomeReady and Home Possible are for low-income borrowers, measured against AMI. HomeOne is for first-time homebuyers at any income.
Income limit: HomeReady: total annual qualifying income can’t exceed 80% of AMI for the property’s location. Home Possible: qualifying income is limited to 80% of AMI. HomeOne: no income limit.
First-time homebuyer: Not required for HomeReady or Home Possible. Fannie Mae says HomeReady borrowers may be first-time or repeat buyers. HomeOne requires at least one borrower to be a first-time homebuyer on a purchase.
Homeownership education: Required on a purchase when all occupying borrowers (HomeReady, Home Possible) or all borrowers (HomeOne) are first-time homebuyers. Home Possible also requires it when every borrower’s credit is established only with noncredit payment references.
Property: HomeReady and Home Possible allow 1- to 4-unit primary residences, with different rules above 1 unit. HomeOne is 1-unit only.
Loan type: HomeReady and Home Possible allow fixed rates and certain ARMs. HomeOne is fixed-rate only. Above 95% loan-to-value, HomeReady is limited to fixed rates.
Underwriting: HomeOne must get an Accept from Freddie Mac’s Loan Product Advisor. Manual underwriting isn’t allowed. HomeReady and Home Possible can be manually underwritten in some cases, at lower maximum loan-to-value ratios.
What AMI means, and why the address matters
AMI stands for area median income. It’s a household income figure for an area. It is not the median home price. For HomeReady and Home Possible, the agencies compare your qualifying income (the income the lender uses to approve the loan) against the AMI limit for the property you’re buying. So the same income can fit the program on one street and not on another.
Two details matter here:
It’s qualifying income, not household income. Fannie Mae’s Selling Guide says the lender counts income from all borrowers who will sign the note, to the extent that income is used to qualify for the loan. A roommate or family member who isn’t on the loan doesn’t count toward the HomeReady test. Freddie Mac’s Home Possible limit is also stated in terms of qualifying income.
The agencies’ own numbers control. Fannie Mae says lenders must use the AMIs in Desktop Underwriter or on Fannie Mae’s website, not other published versions. Fannie Mae also notes its AMI figures are updated over time, so check close to when you apply.
Check an actual address
You can look up an address yourself with the agencies’ official tools:
Fannie Mae Area Median Income Lookup Tool (HomeReady): https://ami-lookup-tool.fanniemae.com/amilookuptool/
Freddie Mac Home Possible Income and Property Eligibility Tool: https://sf.freddiemac.com/working-with-us/affordable-lending/home-possible-eligibility-map
Enter the property address, or the area you’re shopping, and compare the limit to your expected qualifying income. Treat the result as a first check. Your lender’s submission to Desktop Underwriter or Loan Product Advisor decides whether the loan actually fits. HomeOne doesn’t need this lookup, because it has no income limit.
HomeReady (Fannie Mae)
A first mortgage for a purchase or limited cash-out refinance on a 1- to 4-unit principal residence, including condos, PUDs, eligible co-ops, manufactured housing and new construction.
Above 95% loan-to-value, it must be a 1-unit principal residence on a fixed-rate loan of up to 30 years, underwritten in Desktop Underwriter. High-balance loans and ARMs aren’t allowed at that level.
No minimum contribution from your own funds is required on a 1-unit home. Gifts, grants and Community Seconds can help with funds to close.
Boarder income from someone who has lived with you for the last 12 months can count, up to 30% of qualifying income, if it’s documented as the Selling Guide requires.
Mortgage insurance applies with less than 20% down. Fannie Mae describes it as reduced and cancellable, with restrictions.
Fannie Mae also lists a $2,500 credit for very low-income first-time homebuyers, available for a set delivery window that Fannie Mae publishes. Whether it applies to a specific loan depends on eligibility and the lender.
Home Possible (Freddie Mac)
Purchase or no cash-out refinance of a primary residence: 1- to 4-unit homes, condos, PUD units, co-ops and manufactured homes, with added requirements.
Up to 97% loan-to-value on a 1-unit fixed-rate loan. With an eligible Affordable Second behind a fixed-rate first mortgage, total loan-to-value can go up to 105%.
Non-occupying borrowers are allowed if at least one borrower lives in the home, at lower maximum ratios.
Down payment can come from gifts, grants, cash on hand, Affordable Seconds, sweat equity and employer assistance.
Mortgage insurance on a 1-unit home can be cancelled once the balance drops below 80% of the appraised value and the other cancellation criteria are met. Coverage requirements are reduced above 90% loan-to-value.
Purchases of 2- to 4-unit homes add landlord education and a minimum contribution from your own funds in some cases.
HomeOne (Freddie Mac)
No borrower income limits and no geographic limits.
On a purchase, at least one borrower must be a first-time homebuyer. Freddie Mac’s Guide defines that term, and your lender applies the exact definition.
A 1-unit primary residence that all borrowers occupy. Manufactured homes aren’t eligible unless they’re CHOICEHomes.
A fixed-rate loan for a purchase or a no cash-out refinance, with an Accept from Loan Product Advisor.
Up to 97% loan-to-value, and up to 105% total loan-to-value with an Affordable Second. Above 95% loan-to-value, standard mortgage insurance coverage of 35% applies.
Homebuyer education is required on a purchase when all borrowers are first-time homebuyers.
The 3% down payment is not down payment assistance
The 3% figure is a minimum down payment. It isn’t money anyone gives you. Down payment assistance is a separate layer, such as a grant, a gift or a second mortgage from an eligible program, and it has to meet the agency’s rules for that kind of funding. Fannie Mae calls eligible assistance seconds Community Seconds, and Freddie Mac calls them Affordable Seconds. Each program you add brings its own terms, and the stricter income limit applies when both a second and the first mortgage have one.
How to think about which one fits
Your income is at or under the AMI limit for the address: HomeReady and Home Possible are both worth pricing. The lender can run both, because pricing, mortgage insurance and underwriting results can differ between Fannie Mae and Freddie Mac on the same file.
Your income is over the limit, and you or a co-borrower is a first-time buyer: HomeOne may be the low down payment conventional option, if the home is a 1-unit primary residence and the loan gets an Accept.
You’re buying a duplex to live in: HomeOne won’t work, because it’s 1-unit only. HomeReady and Home Possible have separate 2- to 4-unit rules.
Credit is thin or a co-signer is involved: The rules on non-occupant borrowers, manual underwriting and education differ, so this is a question for the lender.
It also makes sense to compare these against FHA. See FHA vs Conventional Loans and How Much Money Do You Need to Buy a House?.
Questions to ask your lender
Which of the three did you run, and what did Desktop Underwriter or Loan Product Advisor return?
What income are you counting as qualifying income, and what is the AMI limit for this address?
What mortgage insurance coverage and monthly cost does each option carry?
Do you have any overlays beyond Fannie Mae’s or Freddie Mac’s rules?
Which homeownership education course will satisfy the requirement, and when do I need to finish it?
If I’m adding down payment assistance, does the program meet the Community Seconds or Affordable Seconds rules?
If you also need down payment help, How to Compare Down Payment Assistance Programs explains the trade-offs, and What Credit Score Do You Need to Buy a House? covers score requirements across loan types.
FAQ
Do I have to be a first-time buyer for HomeReady or Home Possible?
No. Being a first-time buyer isn’t a requirement for either one. It affects whether homeownership education is required. HomeOne is the one that requires a first-time homebuyer on a purchase.
Is AMI the same as my household income?
No. AMI is the median income figure for the area. Your side of the comparison is your qualifying income, meaning the income of the borrowers on the note that the lender uses to qualify you.
Are the AMI limits the same everywhere in Utah?
No. They depend on the property’s location and change over time. Look up the specific address with the tools above.
Does 3% down mean I only need 3% to close?
No. You still have closing costs and prepaid items, and the lender may require reserves. See How Much Money Do You Need to Buy a House?.
Can I get rid of the mortgage insurance later?
All three use conventional mortgage insurance, which can generally be cancelled when the cancellation criteria are met. Ask your lender how that works for your specific loan.
Next step
If you want to see which of the three fits your income and the home you’re looking at, contact me. Please don’t send pay stubs, tax returns or your Social Security number through the contact form or by email. If we work together, I’ll explain the secure way to share documents.
Sources
Fannie Mae Selling Guide B5-6-01: HomeReady Mortgage Loan and Borrower Eligibility
Fannie Mae Selling Guide B5-6-02: HomeReady Underwriting Methods and Requirements
Fannie Mae Selling Guide B2-2-06: Homeownership Education and Housing Counseling
Freddie Mac Home Possible Income and Property Eligibility Tool
Sources checked November 7, 2026. Jimmy Hobson, NMLS #1514540, UMortgage, powered by NEXA Lending (NMLS #1660690). This article is general education, not a loan approval or commitment to lend. Program rules, income limits and availability change, and approval depends on full underwriting.
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