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How the Wells Fargo yourFirst Mortgage Program Works

How the Wells Fargo yourFirst Mortgage Program Works

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru
  • Important Wells Fargo yourFirst Mortgage Program Considerations
  • Pros Cons
    • Ability to purchase a home with a 3% down payment and no borrower contribution
    • Simpler loan application process as compared to other low down payment programs
    • Non-traditional borrower credit profiles considered
    • No income limit and alternate sources of income from property residents (relatives and renters) considered
    • No up-front FHA mortgage insurance premium (MIP) and potentially lower ongoing private mortgage insurance (PMI) cost as compared to an FHA mortgage
    • Potential interest rate discount for borrowers who complete education class
    • No restrictions on property location
    • Requires full documentation and lender underwriting
    • Borrowers with lower credit score may have difficulty qualifying
    • Relatively conservative borrower debt-to-income ratios
    • Requires borrowers to pay private mortgage insurance (PMI)
    • Limit on mortgage amount
    • Applies to purchase mortgages only
  • yourFirst Mortgage Program Overview
  • Wells Fargo launched the yourFirst Mortgage Program to help first-time home buyers and low-to-moderate income borrowers afford mortgages. The yourFirst Mortgage Program, offered in conjunction with with Self-Help and Fannie Mae, enables home buyers to buy a home with a down payment as low as 3.0% of the property purchase price and no minimum borrower contribution.

    Wells Fargo, Fannie Mae and Self-Help cooperated to develop the yourFirst Mortgage Program to offer borrowers a low down payment mortgage option that is potentially less complex and more borrower-friendly than other programs. Wells Fargo is one of the biggest mortgage lenders in the country. Fannie Mae is a government-sponsored enterprise that provides mortgage capital to lenders. In short, Fannie Mae buys mortgages from lenders such as Wells Fargo which in turn enables lenders to offer more mortgages. Self-Help is a community development lender that focuses on borrowers underserved by traditional financial institutions.

    The borrower can combine the yourFirst Mortgage Program with a personal gift, employer program, down payment grant or closing cost assistance program to pay for a down payment or closing costs, allowing the borrower to buy a home with no personal financial contribution. Down payment and closing cost assistance grants are provided through state or local housing agencies or commissions.

    • Review information on down payment grants and other mortgage assistance programs in your state STATE PROGRAMS

    Unlike many other low or no down payment mortgage programs, yourFirst Mortgage participants are not required to take a homebuyer counseling class although borrowers that make a down payment of less than 10% may be able to reduce their interest rate by .125% by completing a HUD-approved homebuyer education course. Additionally, the yourFirst Mortgage Program does not apply borrower income limits or restrict where a property is located, making the program accessible to more homebuyers in more locations. 

    The Wells Fargo yourFirst Mortgage Program competes with the Bank of America Affordable Loan Solution Program, the Fannie Mae HomeReady Program and the FHA Mortgage Program. These programs also enable borrowers to buy a home with a down payment as low as 3.0% - 3.5% and no personal financial contribution. In some ways, yourFirst Mortgage takes some of the best parts of these other programs and puts them into a single program for low-to-moderate income borrowers. For example, similar to the HomeReady Mortgage Program, yourFirst Mortgage considers non-traditional credit profiles and income from non-borrower household members, such as relatives or boarders, to determine a borrower’s ability to qualify for a mortgage.

  • How the Wells Fargo yourFirst Mortgage Program Program Works
  • Borrowers apply for and obtain a yourFirst Mortgage through Wells Fargo which then sells the loans to Fannie Mae. From the borrower’s perspective this means you get your mortgage from, and make your payment to, Wells Fargo which is simpler than other programs where borrowers get a mortgage from a bank and then makes their payments to another organization after the mortgage closes. Wells Fargo worked with Self-Help to ensure that the program is easy to understand and manageable for home buyers. If you are interested in the program your first step is to contact Wells Fargo by calling, visiting the Wells Fargo web site or going to a local branch.

    We recommend that you compare loan terms including rates, closing fees and APR for a Wells Fargo yourFirst mortgage to the terms for other low down payment programs. Contact lenders in the table below to determine the low down payment programs they offer and request loan terms. Comparing multiple lenders and programs enables you to find the mortgage that best meets your needs.

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  • Wells Fargo yourFirst Mortgage Program Qualification Requirements
  • We review the key yourFirst Mortgage Program qualification requirements below:

    Credit Score

    The yourFirst Mortgage Program typically requires a minimum borrower credit score of 620 although non-traditional credit profiles will also be considered. If you do not have a credit score or traditional credit profile Wells Fargo may consider your payment history from tuition, rent or utility bills as well as other non-traditional forms of credit to assess your credit-worthiness. Please note that borrowers with lower credit scores may find it challenging to qualify for the yourFirst Mortgage Program. Credit-challenged borrowers typically must have compensating factors such as significant savings in the bank or low debt-to-income ratios to qualify for the mortgage.

  • Great Mortgage IdeaWe recommend that you review your credit report six months to a year before you start the mortgage process to avoid negative surprises and address potential issues
  • Borrower Debt-to-Income Ratio

    The program applies a maximum borrower debt-to-income ratio of 43% to determine what size mortgage a borrower can afford. In short, a debt-to-income ratio is the ratio of how much you spend on monthly debt payments such as your mortgage and credit card bills to your monthly gross income. The higher the debt-to-income ratio used by the lender, the larger the mortgage you can afford. The debt-to-income ratio limit used by the yourFirst Mortgage Program is lower than for standard mortgage programs as well as the HomeReady and FHA mortgage programs which permit a borrower debt-to-income ratio of 50% or higher under certain circumstances. A lower debt-to-income ratio reduces what size mortgage you qualify for using the yourFirst Mortgage Program.

    The program also considers income from non-borrower household members such as relatives or renters in evaluating a borrower’s ability to qualify for a mortgage. Although these individuals are not actually applying for the loan or listed on the mortgage, their income can be used to help borrowers qualify for a yourFirst Mortgage which is especially helpful for first-time or credit-challenged borrowers. This program feature is similar to the HomeReady Mortgage Program which uses income from non-borrower household members to enable borrowers to qualify for a larger loan amount.

    Borrower must also demonstrate the ability to repay to mortgage based lender underwriting guidelines and qualified mortgage standards. This requirement helps prevent borrowers from getting mortgages they cannot afford.

    Borrower Income Limit

    The yourFirst Mortgage Program does not apply borrower income limits or restrict where a property is located, making the program accessible to more homebuyers in more locations.  The Chase DreaMaker Mortgage Program and Bank of America Affordable Loan Solution Program both use borrower income limits.  Additionally, the HomeReady and Home Possible Mortgage programs may use income limits depending on the location of the property.

    Home Buyer Counseling Class

    Unlike most low or no down payment mortgage programs, yourFirst Mortgage Program applicants are not required to take a home buyer counseling class although borrowers that make a down payment of less than 10% may be able to reduce their interest rate by .125% by completing a HUD-approved home buyer education course.

    First-Time and Repeat Home Buyers

    The yourFirst Mortgage Program is available to both first-time home buyers and borrowers who have previously owned a home.

    Borrower Financial Reserves

    The yourFirst Mortgage Program does not require borrowers to hold reserves in savings at mortgage closing although FREEandCLEAR recommends that you hold enough savings in reserve to cover three-to-six months of total monthly housing expense which includes your mortgage payment, property tax, homeowners insurance and other applicable housing related expenses.

    Use our mortgage quote form to review free, no obligation loan quotes from leading lenders. Our quote feature is free, easy-to-use and requires minimal personal information. Comparing multiple proposals is the best way to save money on your mortgage.

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  • Program Costs and Fees
  • Mortgage Rate

    The interest rate you pay depends on several factors including your credit score and loan-to-value (LTV) ratio. Borrowers with a credit score of 720 and above receive the program’s best interest rate while borrowers with lower credit scores and higher LTV ratios pay higher interest rates or may not be able to qualify for the program. For borrowers with good credit scores, the interest rate for a Wells Fargo yourFirst mortgage is slightly higher than other conventional low / no down payment programs and significantly higher than the interest rate for government-backed low and no down payment programs such as the FHA, VA and USDA programs. Eligible yourFirst Mortgage Program applicants, however, can reduce their interest rate by .125% by taking a home buyer counseling class.

    Private Mortgage Insurance (PMI)

    The yourFirst Mortgage Program requires that borrowers purchase private mortgage insurance (PMI), which is an ongoing monthly cost in addition to your monthly mortgage payment. In short, PMI protects the lender in the event that the borrower defaults on the mortgage. The amount of PMI the borrower is required to pay depends on the borrower’s credit score and down payment, with the larger the down payment, the lower the required PMI. For the yourFirst Program, PMI can be included in the cost of the loan or purchased separately by the borrower.

    Most conventional low down payment programs, including the HomeReady and Home Possible Programs, require borrowers to pay PMI while the FHA and USDA Mortgage programs require the borrower to pay both an up-front and ongoing mortgage insurance premium (MIP).  The yourFirst Mortgage Program does not require borrowers to pay an up-front PMI fee and the monthly PMI fee is removed when your LTV ratio falls below 78%.  The Bank of America Affordable Loan Solution does not require borrowers to pay any PMI.

    Extra Fees

    Borrowers are required to pay standard lender fees and closing costs with the yourFirst Mortgage Program.  Aside from a small fee to pay for the home buyer counseling class, if necessary, borrowers are not required to pay additional fees to apply for the program. Borrowers using a down payment or closing cost grant may be required to pay a separate fee to the housing agency or commission to apply for that program.

    Impound Account

    Along with their mortgage payment, the yourFirst Mortgage Program requires borrowers to pay property tax and homeowners insurance into an impound account on a monthly basis.   An impound account is a trust account controlled by the lender from which expenses such as taxes and insurance are paid when due.  The impound account does not affect the amount of fees the borrower is required to pay for the mortgage.

    Use the FREEandCLEAR Lender Directory to find lenders that offer twenty-five mortgage programs including many no or low down payment programs.

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  • Mortgage Type and Loan Amount
  • Mortgage Program

    The program only applies to fixed rate mortgages. Adjustable rate mortgages (ARMs) and interest only mortgages are not eligible for the program.

    Loan Limit

    The program only applies to conforming loan amounts ($484,350 or below for a single unit property in most counties) which limits the size of mortgage you can obtain.

    Mortgage Type

    The yourFirst Mortgage Program only applies to home purchase mortgages. Refinancings are not allowed according to program guidelines.

  • Property Eligibility
  • Owner occupied, single-family primary residences are eligible for the yourFirst Mortgage Program. Investment properties, second homes and multi-family properties are not eligible.

  • Great Mortgage IdeaRelated FREEandCLEAR Resources
  • Sources:

    Wells Fargo yourFirst Mortgage Program: https://www.wellsfargo.com/mortgage/loan-programs/your-first-mortgage/

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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