The Neighborhood Assistance Corporation of America (NACA) is a non-profit, community advocacy and homeownership organization. NACA offers a home purchase mortgage program designed to make home ownership more attainable for more people, especially people with limited funds and challenging credit profiles.
In short, the NACA mortgage program enables eligible borrowers to purchase a home with no down payment, no closing costs or fees and no private mortgage insurance (PMI) using a fixed rate mortgage with an at or below market interest rate. Although borrowers are not required to pay any mortgage closing costs or fees, before applying for the mortgage they are typically required to pay an up-front, one-time membership fee to join NACA as well as a credit report fee.
NACA is not a lender and does not offer mortgages directly to borrowers. Instead, the NACA mortgage program is offered through participating lenders, primarily Bank of America and Citibank. We outline the key terms and requirements of the program below. You can learn more about the program, including how to apply, by visiting the NACA web site.
A mortgage program with below-market mortgage rates, no down payment requirement and no closing costs may sound too good to be true so it is important to highlight the programâs unique qualification requirements. Program participants must adhere to the NACA mortgage application and home purchase process which can be more time consuming and information-intensive than the standard mortgage process. The NACA process requires that borrowers provide a budget for the past three to six months, a debt payment and cash flow history and borrowers must show income stability. Borrowers must also provide full documentation of income, assets and debt including 90 days of bank statements (self-employed borrowers must provide twelve months of bank statements).
We recommend that you compare the loan terms and eligibility requirements for a NACA mortgage to the terms and guidelines for other no or low down payment programs. Contact lenders listed in the table below to determine the programs they offer and request loan proposals. Comparing multiple lenders and loan programs enables you to find the mortgage that is right for you.
Because of its requirements, you may be concerned that the NACA application process puts borrowers at a disadvantage when buying a home. Home sellers typically prefer buyers that move fast and place fewer conditions and contingencies on an offer. NACA has implemented several steps to address these concerns and make sure that the application process does hinder your ability to buy a home.
According to NACA, once a home purchase agreement has been submitted, most closings take place within 28 days. This helps to mitigate potential concerns from home sellers that it takes longer for NACA members to complete the mortgage and purchase process. In addition, the organization offers âAchieve the Dreamâ events which combine the first four steps of the NACA process (workshop, document submission, counseling and underwriting review) into a single event where applicants can be approved for the program in as little as one day.
The NACA Program is well-suited for borrowers with low credit scores or limited credit histories. Instead of solely relying on your credit report and score, NACA applies a rigorous character-based approach to determine a borrowerâs credit-worthiness. For example, a borrower is not penalized if he or she experienced financial hardship due to high medical expenses caused by an illness.
Borrowers must demonstrate the ability to afford their total monthly housing expense which includes your mortgage payment plus property tax, homeowners insurance and homeowner association fees, if applicable. NACA compares borrowers' monthly income and debt (including credit card, student and auto loans and alimony payments) to their total monthly housing expense to determined their ability to qualify for a mortgage and participate in the program. Borrowersâ financial situations including their monthly income, debt and savings cannot fluctuate significantly during the application process and after their mortgage closes. Borrowers may also be required to provide cancelled rent checks during the application process.
We summarize the NACA mortgage application and home buying process below and you can find more detailed information on the NACA web site.
Use the FREEandCLEAR Lender Directory to search for twenty-five mortgage programs including many no or low down payment options
Related FREEandCLEAR Resources
NACA Program: https://www.naca.com/purchase/steps-to-homeownership/
NACA Location Map: https://www.naca.com/offices/