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What is a HomeOne Mortgage?

a couple standing in the middle of an empty houseThe HomeOne mortgage from Freddie Mac presents an ideal solution for first-time homebuyers seeking a low down payment option. This program, structured by the renowned Federal Home Loan Mortgage Corporation (Freddie Mac), enables qualified purchasers to acquire their dream homes with a 3% down payment without specific income or geographical constraints.

In addition to facilitating home purchases, the HomeOne mortgage offers refinancing opportunities for existing homeowners. Those looking to refinance can do so without accessing any equity in cash, given that Freddie Mac services their current loan—a detail confirmable through the convenient Freddie Mac Loan Look-Up Tool.

Key Takeaways

  • A detailed guide is available that discusses the HomeOne Loan offered by Freddie Mac, which is aimed at assisting first-time homebuyers and those seeking to refinance their homes by providing a low-down-payment option and lenient requirements.
  • The HomeOne mortgage program allows buyers to put down as little as 3% on their home purchase without being restricted by income caps or property location. However, if the loan-to-value (LTV) ratio exceeds 95%, the borrower must pay for mortgage insurance and cannot perform cash-out refinancing.
  • To qualify for this mortgage option, applicants must meet specific criteria such as having at least one borrower who is a first-time homebuyer for purchase loans, the property must be a single-unit primary residence, a minimum of 3% down payment is required, and homebuyer education is necessary for all first-time purchasers. Additionally, none of the borrowers should have owned a property in the three years following the application.
  • Interest rates offered under the HomeOne program are generally more competitive than traditional mortgage rates. However, the actual rate a borrower receives will depend on personal financial factors like credit history and stable employment.
  • Freddie Mac operates by purchasing mortgages from financial institutions rather than offering loans directly to individuals. These institutions can include banks, mortgage companies, and credit unions. Loans that meet Freddie Mac's standards are referred to as conforming mortgages.
  • The debt-to-income ratio limit set for the HomeOne loan is 45%, which means your monthly debt payments, including the mortgage, should not surpass 45% of your gross income.
  • Most financial institutions expect a credit score of at least 620 for applicants, although there isn't an explicit minimum credit score mandated for HomeOne loans.
  • At least one participant in the loan must be purchasing a home for the first time, and if all parties on the loan are first-time buyers, then at least one must undergo a homeownership education course.
  • One can refinance their property with this mortgage option, but cash-out refinances are not viable under this program.
  • The maximum loan-to-value ratio for a HomeOne loan is 97%, necessitating at least a 3% down payment. Utilizing secondary financing options for down payments and closing costs can potentially increase the LTV ratio to 105%.
  • Borrowers can use various forms of down payment assistance when securing a HomeOne loan, including financial gifts, grants, or secondary financing such as Affordable Seconds loans.

Understanding the Mechanics of the Homeone Mortgage Program

Obtaining a HomeOne mortgage involves a process akin to other initial homebuyer loans. Begin by applying through a lender that participates in the program. While many lenders offer loan programs from Fannie Mae and Freddie Mac, please verify with your loan officer that they provide the HomeOne mortgage specifically. Independent first-time homebuyers are required to complete an approved homebuyer education course. However, no-cost options are available, and this requirement is waived if a co-borrower has previously owned property.

Prepare to submit financial documents such as pay stubs, W-2 forms, and bank statements for income and asset verification. Your credit score will also be scrutinized to ensure it aligns with the HomeOne program's standards. Another critical component of this mortgage is the compulsory mortgage insurance, which safeguards the lender if you default on payments. The amount of coverage you must acquire hinges on your loan-to-value (LTV) ratio, and you must choose from approved insurance providers. Remember, only fixed-rate mortgage options are acceptable within this program; adjustable-rate mortgages (ARMs) do not qualify.

Requirements for a Homeone Loan

While the HomeOne program enables those with higher incomes to be eligible, additional limitations are associated with this adaptability. To qualify for the HomeOne program, at least one borrower must have had no ownership in a residential property in the last three years.

All borrowers must live in the home as their primary residence, and eligible properties include one-unit homes, planned unit developments, and condominiums. The down payment is 3%, and at least one borrower must have a usable credit score. The total monthly debt compared to verified gross income can't exceed 45%, and homeownership education is required if all borrowers are first-time homebuyers.

Advantages and Disadvantages of a HomeOne Mortgage

Pros of a HomeOne Mortgage:

  1. No income limits or location restrictions: HomeOne mortgage is available to borrowers without any income limits or location restrictions, making it accessible to a broader range of people.
  2. Low down payment: HomeOne mortgage only requires a 3% down payment, which is lower than the typical 20% down payment required for most conventional loans. This can help make homeownership more affordable for many borrowers.
  3. Flexible credit requirements: HomeOne mortgage has flexible credit requirements, making it easier for borrowers with lower credit scores or limited credit history to qualify for a loan.
  4. Fixed-rate option: HomeOne mortgage offers a fixed-rate option, which means that the interest rate and monthly payments will remain the same throughout the life of the loan, providing borrowers with stability and predictability.

Cons of a HomeOne Mortgage:

  • Private mortgage insurance (PMI): Borrowers with a HomeOne mortgage will have to pay for private mortgage insurance (PMI) if they put down less than 20% of the purchase price, which can add to the overall cost of the loan.
  • Higher interest rates: HomeOne mortgage interest rates may be higher than other conventional loan options, which could result in higher monthly payments over the life of the loan.
  • Limited eligibility: HomeOne mortgage is only available to first-time homebuyers or those who haven't owned a home in the past three years, which may limit eligibility for some borrowers.
  • Property restrictions: HomeOne mortgage may have restrictions on the type of property that can be financed, such as a limit on the number of units in a multi-unit property. This may limit the options for some borrowers purchasing a specific property type.

Loan Limits

The maximum loan amount for Freddie Mac's HomeOne mortgage program is $726,200 in most parts of the country. However, buyers purchasing expensive homes in high-cost areas of the U.S. may be eligible for loan amounts as high as $1,089,300, the maximum high-cost conforming limit in 2023.

Credit Score Requirements

To be eligible for a Freddie Mac HomeOne loan, applicants are generally expected to have a credit score of 620 or above. It's important to note that individual lenders may set their credit thresholds, and in some cases, they might look for higher credit scores.

Applicants with credit scores above the typical 620 minimum may increase their chances of approval and potentially secure more attractive terms, like reduced interest rates. When considering a Freddie Mac HomeOne loan, it's wise to consult with various lenders as they each may enforce different credit score criteria.

Always stay updated on the latest lending standards by speaking with mortgage professionals. They can offer current advice on the Freddie Mac HomeOne loan program's credit score prerequisites, ensuring you receive personalized recommendations based on your financial profile and current market conditions.

Income Limits

The HomeOne loan program from Freddie Mac is not bound by strict income caps, aiming to facilitate home purchases for first-time buyers and individuals with moderate income levels. Eligibility for a HomeOne loan usually requires:

Status as a First-Time Homebuyer: This program is mainly open to those purchasing a home for the first time. To qualify as a first-time homebuyer, an individual should not have owned a property within the last three years. There can be exceptions to this rule, so potential borrowers should confirm with a mortgage lender to understand the exact requirements.


The Freddie Mac HomeOne mortgage is an excellent option for high-income buyers who don't have a large down payment saved. With only a 3% down payment required and no income limits, it can help you get into a home faster than you might have thought possible. However, other low-down-payment options might work for you if you don't qualify for the HomeOne program.

HomeOne® - Freddie Mac Single-Family.

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