Buying a home feels like trying to hit a moving target while wearing a blindfold. Just when you think you’ve saved enough, prices jump. Or worse, you find a program that sounds perfect—like Fannie Mae’s HomeReady—only to realize the fine print on Fannie Mae income limits might actually lock you out of the deal.
Honestly, it's a bit of a paradox. These programs are built to help people, but if you make too much money, you're disqualified. But here’s the kicker: "too much" in San Francisco is a fortune in rural Iowa.
The numbers just changed for 2026. If you're looking at a house right now, the 2025 data you found on some random blog is probably already obsolete.
The 80% Rule That Rules Everything
Basically, the core of the Fannie Mae HomeReady program is the 80% Area Median Income (AMI) limit.
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It’s not a national number. There is no single "Fannie Mae income limit" for the whole United States. Instead, it’s a hyper-local calculation based on the census tract where the house is located. Not even just the county—the specific neighborhood.
In most spots, if your qualifying income is $1 over that 80% line, the 3% down payment dream evaporates. You’re suddenly shoved back into the world of standard conventional loans, which often carry higher interest rates or more expensive private mortgage insurance (PMI).
Why the 2026 Update Matters
The Federal Housing Finance Agency (FHFA) recently bumped the conforming loan limits to $832,750 for 2026. That’s a 3.26% increase. While that tells you how much you can borrow, it also signals that the "median" income in many areas has shifted.
When home prices go up, the income required to live in those areas usually follows. For 2026, many buyers who were "over-income" last year might actually find themselves qualifying now because the ceiling moved up.
How to Actually Check Your Limit
Don't guess. Please.
Fannie Mae provides an AMI Lookup Tool. You plug in the exact street address of the house you want to buy. It spits out a percentage.
- If the tool says the AMI is $100,000, your limit is $80,000.
- In a place like Salt Lake County, the AMI is sitting around $115,400, making the HomeReady limit $92,320.
- Move over to Fulton County, Georgia (Atlanta area), and the AMI is $106,100, which puts your cap at $84,880.
It is a "hard" limit in most cases. However, there’s a massive loophole people miss: High-needs rural tracts or certain low-income census tracts sometimes have no income limit at all. You could be making half a million a year and still get the "low-income" loan benefits if you buy in the right (or "wrong") neighborhood.
The Income "Calculation" Trap
Here is where things get messy. Lenders don't just look at your W-2 and call it a day.
They use "qualifying income." This is a huge distinction. If you have a base salary of $70,000 but you make $20,000 in overtime, your lender might be able to exclude that overtime to keep you under the Fannie Mae income limits.
Wait, why would you want to look poorer?
Because if that $20,000 pushes you to $90,000 and the limit is $85,000, you lose the HomeReady perks. By only using your base pay to qualify you for the loan (assuming you can still afford the DTI ratio), the lender helps you keep the lower interest rate and the $2,500 credit often given to very low-income buyers (those under 50% AMI).
But—and this is a big "but"—they can't just ignore income for fun. If you're a self-employed "gig worker" or you own a business, they have to use a complex average of your last two years of tax returns.
What counts as income?
- Base Salary: The easy part.
- Boarder Income: If you have a friend living with you paying rent for 12 months, Fannie Mae actually lets you count that to help you qualify.
- Rental Income: Buying a 2-unit property? You can use the projected rent from the other unit.
- Alimony/Child Support: Only if it's guaranteed to continue for three years.
HomeReady vs. Home Possible
You’ve probably heard of Freddie Mac’s version called Home Possible.
They are almost identical. Both use the 80% AMI cap. Both allow 3% down.
The difference is usually in the credit score and how they treat specific property types. Fannie Mae (HomeReady) is generally a bit more "forgiving" with its Desktop Underwriter (DU) system if you have a 620 score, whereas Freddie often wants to see 660 for their best terms on a single-family home.
If you're right on the edge of the income limit, ask your broker to run the file through both systems. Sometimes one "reads" the census tract data slightly differently than the other, or one accepts a higher debt-to-income (DTI) ratio—Fannie goes up to 50% in certain cases.
Actionable Steps to Navigate the Limits
First, get the address. You cannot know your limit without it. Use the Fannie Mae AMI Lookup Tool immediately for any house you're serious about. If you're $2,000 over the limit, talk to your loan officer about "qualifying income" vs. "total income." You might be able to leave out a small bonus or a side hustle to stay under the cap.
Second, check for the $2,500 credit. For 2026, Fannie Mae is still pushing a lender credit for those at or below 50% of the AMI. That’s free money toward your closing costs.
Third, don't forget the education requirement. If you’re a first-time buyer using these programs, you have to take an online course (Fannie Mae HomeView). It’s free and takes a few hours. Do it early so it doesn't hold up your closing.
Finally, remember that these limits reset. If you don't find a house by the time the next cycle of data comes out, the "goalposts" will move again. Stay on top of the neighborhood-specific data, especially in "gentrifying" areas where the AMI is climbing fast.
Next Steps for You
- Locate the property address you are interested in.
- Enter it into the Fannie Mae AMI Lookup Tool to find the specific 80% threshold for that census tract.
- Compare your base qualifying income (excluding optional bonuses/overtime) against that number to see if you qualify for the reduced interest rates.