You might not be aware of the many different home loan programs there are to help buyers purchase a home. Most people just go to their local bank and start the application process. However, there are other programs that may be of interest to you. As a Wisconsin-licensed realtor with eXp Realty LLC, I refer my clients to an independent mortgage broker. They are knowledgeable on the various programs, whether federal or state, that you may qualify for.
So let’s take a look at some of these programs.
NACA – Neighborhood Assistance Corporation of America
The Neighborhood Assistance Corporation of America (NACA) is a non-profit organization fighting for economic justice through home ownership and community action. NACA is the largest HUD certified counseling agency in the United States.
- No down payment
- No standard closing costs; however, there are upfront costs such as earnest money, home inspection cost, credit report fee, NACA membership fee ($25/yr), one year of property taxes and insurance, and reserve cash of one month’s expenses.
- Low interest rate
- No PMI – private mortgage insurance
- More flexible qualifications
- Home buyer counseling and budgeting
- The application process can be lengthy and detailed
- Need to attend a home buying workshop and financial budgeting
- There are upfront costs as noted above
- There is a loan limit cap of $510,400, but not a property purchase price cap
- Volunteer requirement such as community outreach, advertising, or events that promote the program
- Cannot use the NACA program to refinance; but there are other programs that can
- Only for owner-occupied housing
- Loans are either 15 or 30 years, fixed; no ARMs or interest-only loans
- NACA is not in every state—30 states currently; The Wisconsin office is located in Milwaukee
WHEDA – Wisconsin Housing and Economic Development Authority (www.wheda.com)
The Wisconsin Housing and Economic Development Authority (WHEDA) was created in 1972 by the Wisconsin Legislature to meet an increasing need for affordable housing financing. The Legislature broadened WHEDA’s mission in 1983 to include financing for the expansion of business and agricultural activity in the state. As a lender, WHEDA has over $2 billion in assets.
The six steps for getting a WHEDA loan:
- Manage your money seminar – You need to sign up for either on-site or online home and budgeting counseling. https://www.wheda.com/Home-Buyers/Counseling-Agencies/
- Find a WHEDA lender – Find a WHEDA Lender. Go to https://www.wheda.com/home-buyers/find-a-wheda-lender/ to use their “Find a WHEDA lender tool.”
- Find a WHEDA mortgage program: WHEDA has mortgage programs tailored to your individual needs: Conventional Mortgage, First-Time Home Buyer (FTHB) Mortgage, Federal Housing Administrated (FHA) Mortgage, WHEDA Tax Advantage (MCC) program, Veterans Affordable Loan Opportunity Rate (VALOR), or down payment assistance. https://www.wheda.com/Home-Buyers/Available-Programs/
- Home Buyer Education: First-time borrowers using a WHEDA loan are required to take a home buyer education class. Learn about the buying process, financing options, and being a responsible homeowner. https://www.wheda.com/Home-Buyers/Seminars/
- Shop for your home: After pre-approval, you can work with a qualified real estate professional to find a home in your target neighborhood and price range. https://ginanewell.exprealty.com/
- Become a Homeowner! If you purchased a home with a WHEDA mortgage, you have access to other WHEDA benefits, and your mortgage loan is locally serviced.
USDA – United States Department of Agriculture
USDA loans are zero-down-payment mortgages for rural and suburban homebuyers. They are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.
The qualifications: U.S. citizenship or permanent residency. Ability to prove creditworthiness, typically with a credit score of at least 640. Stable and dependable income. A willingness to repay the mortgage – generally 12 months of no late payments or collections. In order to be eligible for a rural development loan you must buy a property located in an eligible rural location– 97% of the country is eligible. If you live 50 miles away or further from any major metropolitan city, your home may qualify.
One of the greatest benefits of USDA loans is that they do not require a down payment. You’re able to finance 100% of the purchase price of the home. While an FHA loan has a mortgage insurance premium (MIP) of 0.85% of the loan amount, USDA loans have a much lower MIP rate of 0.35%.
Independent Mortgage Lenders
Check out the various independent mortgage brokers in your area to see which programs you may qualify for. There are some programs that provide money for renovations as well as the initial mortgage all wrapped into one loan. There are some programs that offer cash assistance for the down payment. And as mentioned, there are programs that don’t require any down payment. All of these program have certain requirements and locations that may or may not be available to you. But, if you don’t check, you won’t know about these programs.
I can refer you to several Madison, WI area independent mortgage brokers that would be glad to speak with you with no obligation whatsoever. Good luck on your pre-approval process. The more you do beforehand, the easier the home-buying process will be.
Premiere Stagers & Realty (Gina Newell) 608-345-9396