Fannie Mae First-Time Homebuyer Income Limits and Mortgage Rate Discounts For 2023
![Fannie Mae First-Time Homebuyer Income Limits and Mortgage Rate Discounts For 2023 Mortgage rate discounts and special programs for moderate-income first-time homebuyers.](https://storage.googleapis.com/craftcmsstore001/Images/_singleFeaturedDesktopRetina/78337/Fannie-Mae-Income-Limits-First-Time-Buyer-Rate-Discounts.webp)
You may have heard that conventional loans from Fannie Mae and Freddie Mac require 20% down.
But these agencies offer home loans with as little as 3% down.
However, many of these come with income limits. How much can you make and still qualify?
Income Limits For Fannie Mae and Freddie Mac Conventional Loans
Fannie Mae and Freddie Mac are the two major conventional lending rule makers in the U.S. Most lenders across the country offer these loans.
If you use a standard Fannie Mae or Freddie Mac mortgage with 5% down or more, there are no income limits.
However, many of the 3% down programs do limit the amount you can make and still be eligible.
Fannie Mae HomeReady®
Income limits: 80% of area median income
First-time homebuyer: Not required
HomeReady comes with many flexibilities, such as the ability to use roommate income to qualify. It requires just 3% down, which can come entirely from gift funds or down payment assistance.
For this loan, you need to make 80% or less of your area’s median income.
Fannie Mae Conventional 97
Income limits: None
First-time homebuyer: Required
Fannie Mae has a standard 3% down loan, often called the Conventional 97 Loan or Fannie Mae 97 Standard. This loan lacks some of the flexibilities of HomeReady, but it does not have income limits.
Freddie Mac HomeOne®
Income limits: None
First-time homebuyer: Required
HomeOne is similar to the standard Fannie Mae 97 loan. It has no income limits.
However, at least one borrower on the application must be a first-time homebuyer, meaning they haven’t owned a home in the past three years.
Freddie Mac Home Possible®
Income limits: 80% of area median income
First-time homebuyer: Required
Home Possible is one of the most unique first-time buyer programs. You can use sweat equity as part of your down payment. Sweat equity is the value added to the home with improvements you do yourself before closing of the loan.
One applicant must be a first-time buyer, and qualification income can’t be more than 80% of the area’s median.
How To Find Out Whether You Meet Income Limits
No one knows their area median income, or AMI, off the top of their head.
That’s why Fannie Mae has created a tool that not only shows your AMI but also income limits for certain programs.
Keep in mind that AMI is based on the property’s location, not your current address. AMI can change from neighborhood to neighborhood, so make sure you are checking the specific address of a home you’re interested in.
Here’s what Fannie Mae’s tool looks like when you search an address. Each area will provide different income limit results.
This particular result is for a neighborhood near Dallas, Texas. We’ve added the red rectangle around the income limit for many 3% down conventional loans, which is 80%, including HomeReady as indicated on the result.
![](https://storage.googleapis.com/craftcmsstore001/Images/Fannie-Mae-Area-Median-Income-3-Down-Programs.png)
Image: Fannie Mae Area Median Income Tool
Keep in mind that it’s difficult to know your eligibility income according to the lender. That’s why it’s a good idea to apply for the loan and have the lender determine that number before you count on using an income-based program.
The 2023 Income-Based Mortgage Rate Discount
In late 2022, Fannie Mae and Freddie Mac implemented a first-time homebuyer discount.
It’s not for every first-time buyer, though. Only those who make 100% or less of their area median income, or 120% in high-cost areas, receive a mortgage rate discount.
The discount comes in the form of waived fees.
Typically, Fannie Mae requires extra fees for lower credit scores, lower down payments, certain property types, and other factors. But with the first-time buyer discount, all those fees are waived.
This could result in a 0.50-1.0% reduction in the borrower’s interest rate.
Here’s how you use Fannie Mae’s tool to see if you are eligible for the discount.
High-Cost Area Mortgage Rate Discount Income Limit
Below is a screenshot of Fannie Mae’s income limit tool indicating the income limit for a high-cost area near Denver. Keep in mind that this isn’t the income limit nationwide, just for this specific area. Use Fannie Mae’s tool to find your local income limit for the rate discount.
![](https://storage.googleapis.com/craftcmsstore001/Images/Fannie-Mae-High-Cost-Area-First-Time-Buyer-Mortgage-Rate-Discount-Income-Limit.png)
Image: Fannie Mae Income Tool
Standard Area Income Limit For Rate Discount
Here’s what Fannie Mae’s tool looks like for standard areas. If you are not in a high-cost area, your income limit for the rate discount will be 100% of the property’s area median income.
![](https://storage.googleapis.com/craftcmsstore001/Images/Standard-Area-Rate-Discount-Income-Limit-Fannie-Mae-Freddie-Mac.png)
Image: Fannie Mae Income Tool
Check with your lender to see if you qualify for this substantial rate discount.
First-Time Homebuyer Income Limits: You Might Qualify
In 2023, area income limits were increased over 7% from 2022. This might mean that you can qualify for a income-based program even if you didn’t last year.
Apply today to see if you can get an affordable conventional loan.
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.