The HOME Plus Down Payment Assistance Program has been a great tool for those needing some down payment assistance. When using the Conventional version of the program, there are 2 different varieties available. One of the versions of this highly utilized down payment assistance program has lowered it’s grant amount by 1%.
HOME Plus – 2 Conventional Options
The HOME Plus Program has several different varieties (FHA, VA, Conventional etc…). When looking to use the Conventional mortgage version of HOME Plus, there are 2 different types within that one category. Better put – there are 2 different sets of rules or guidelines when a buyer is using HOME Plus Conventional. Why? Simply put, there are 2 major investors behind Conventional Loans – Fannie Mae and Freddie Mac. Think of them like identical twins with very subtle differences when you look really closely.
Fannie will allow certain things that Freddie won’t and Freddie accepts certain things that Fannie will not. Prior to this reduction of 1% on the Freddie Mac version of the HOME Plus program it did not cost a HOME Plus buyer to choose either the Fannie or Freddie Version. Now, however it is very important to select Fannie Mae if at all possible in order to get the 5% grant.
4% Grant and the 5% Grant
With Fannie handing out a 5% Grant and Freddie limiting their version of the HOME Plus program to a 4% Grant, selecting the best investor and knowing the financial impact of that selection is important. If the only way a HOME Plus buyer will qualify is by utilizing Freddie than 4% is a lot better than 0%. However, do not utilize the Freddie version of the Grant without knowing for sure that Fannie Mae’s 5% Grant version has been fully ruled out if your focus is obtaining the full 5% grant.
Why would one choose Freddie?
There are endless scenarios in which a HOME Plus buyer would qualify for the Freddie Version and not the Fannie Version. Here are the 2 most common:
- Freddie is more lenient in some cases with Self Employed Income
- Freddie’s System (LPA) may approve someone where Fannie’s System (DU) will not – this is where the “endless scenarios mentioned above comes into play”
Be in the know when it comes to your HOME Plus options so that you can take full advantage of the benefits this great program has to offer.
By Jeremy House