HomeReady (Fannie Mae) and Home Possible (Freddie Mac) need just 3% down but cap income at 80% of area median income; FHA needs 3.5% down with a 580 score and has no income limit.
HomeReady (Fannie Mae)
- Down payment: 3% on one unit; 5% on two to four units.
- Credit: Fannie Mae sets no minimum score when Desktop Underwriter approves; at least 620 if manually underwritten.
- Property: principal residence; one to four units, condos, co-ops, PUDs and manufactured homes.
- Education: if all occupying buyers are first-time buyers, one completes a homeownership course before closing.
- Funds: gifts, grants and Community Seconds; one-unit buyers need none of their own money.
- Non-occupant co-borrowers: allowed with 5% down; their income counts toward the limit.
Home Possible (Freddie Mac)
- Down payment: same as HomeReady.
- Credit: acceptable when Loan Product Advisor returns Accept; at least 660 if manually underwritten.
- Property and education: same as HomeReady.
- Funds: gifts, grants, sweat equity and Affordable Seconds, which can cover the whole down payment.
- Non-occupant co-borrowers: allowed with 5% down.
FHA (HUD)
- Down payment: 3.5% with a 580+ score; 10% with 500 to 579, according to HUD.
- Property: one to four units; condos need FHA project or single-unit approval. Move in within 60 days and stay at least a year.
- Education: not required by FHA; many assistance programs require it.
- Funds: gifts from family, employers, unions, close friends, charities or government programs, but not the seller.
- Non-occupant co-borrowers: family members can join at 3.5% down on one unit; others need 25% down.
Mortgage Insurance
Conventional MI, with reduced coverage above 90% LTV, can be cancelled on request at 80% of the original value; federal law ends it at 78% if you're current, per the CFPB.
FHA charges 1.75% of the loan upfront, which can be financed, plus annual MIP: 0.55% on most 3.5%-down loans. With under 10% down, annual MIP lasts the life of the loan; with 10% or more, it ends after 11 years.
Maryland Income Limits
Freddie Mac's 2026 figures put the 80% cap at $131,280 in Montgomery County but $107,200 in Baltimore City. Check addresses with Fannie Mae's Area Median Income Lookup Tool and Freddie Mac's Home Possible Income and Property Eligibility Tool.
Who Each Program Fits
- HomeReady or Home Possible: income within the local limit, solid credit and MI you can cancel. Mortgage insurers and individual mortgage companies may set higher score minimums.
- FHA: income above the limit or a score in the 500s; its MIP ignores credit scores but may last as long as the loan.
Next Steps
Program rules change; confirm current requirements when you apply. Last reviewed September 2026.
Contact us to compare all three for your Maryland home.
Written by
Mortgage Link Services LLC
NMLS #2017350 · Licensed in MD, VA, DC, and PA
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