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First-time buyers · Fannie Mae B5-6-01HomeReady mortgage requirements: income limit, 97% LTV and the homebuyer course

HomeReady is Fannie Mae's conventional community lending mortgage, available from any Fannie Mae lender without special approval. It is for a purchase or limited cash-out refinance of a one- to four-unit principal residence, including condos, PUDs, eligible co-ops and manufactured homes. The total annual qualifying income of everyone signing the note may not exceed 80% of the area median income (AMI) for the property's location – using the AMI figures Fannie Mae publishes, not other versions. Above 95% and up to 97% loan-to-value, the loan must be a fixed-rate purchase or limited cash-out refinance of up to 30 years on a one-unit principal residence, underwritten in DU only. Seller-held second mortgages are not allowed. When all occupying borrowers are first-time homebuyers, at least one must complete homeownership education before closing.

The key rules (B5-6-01)

  1. Income

    Total qualifying income of all note signers at or below 80% of AMI for the property's location.

  2. Occupancy

    Principal residence only; 1–4 units, condos, PUDs, eligible co-ops and manufactured homes.

  3. 95.01–97% LTV

    Fixed rate up to 30 years, one unit, purchase or limited cash-out refinance, DU only; no high-balance or ARM.

  4. Second liens

    Community Seconds allowed (CLTV up to 105%); no seller-held second mortgage.

  5. Education

    Required when all occupying borrowers are first-time homebuyers on a purchase.

What the TC tracks on a HomeReady deal

  • The homebuyer course certificate – a document the lender keeps, needed before closing.
  • Any down payment assistance or Community Seconds paperwork and its deadlines.
  • A seller who offers to carry a second mortgage – not allowed with HomeReady.

Common surprises

  • Income from every borrower on the note counts toward the limit.
  • Online AMI lookups from other sites may not match Fannie Mae's figures – the lender uses Fannie Mae's.
  • DU may suggest HomeReady on a standard loan when income appears to be under the limit – ask the lender.

Questions buyers ask

What is the income limit for HomeReady?

Total annual qualifying income may not exceed 80% of the area median income for the property's location, using Fannie Mae's AMI data (B5-6-01).

Can HomeReady be used for a duplex?

Yes. HomeReady covers one- to four-unit principal residences, though loans above 95% LTV must be one unit.

Do I have to take a homebuyer class?

If all occupying borrowers are first-time homebuyers on a HomeReady purchase, at least one must complete homeownership education before closing (B5-6-01, B2-2-06).

Related guides

In ClosingCode, add the homebuyer course certificate as a document on the deal and request it from your buyer by link – in English or Spanish.

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Source: Fannie Mae Selling Guide B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility (06/04/2025), selling-guide.fanniemae.com, read October 25, 2026.

General information about Fannie Mae conventional loans, not legal or financial advice. Income limits come from Fannie Mae's own AMI data, and lenders can add rules. ClosingCode is software; it is not a lender or counseling agency. This guide is not a substitute for the advice or services of an attorney.