Chase DreaMaker Mortgage Program Pros and Cons
The DreaMaker Program offers borrowers multiple benefits including a competitive interest rate, flexible qualification requirements, potentially lower monthly PMI fees and no restrictions on property location or mortgage type. DreaMaker Program considerations include a higher mortgage rate as compared to government-backed mortgage programs and loan limits.
We review the full list of the pros and cons for the DreaMaker Program below. Borrowers should understand both the positives and negatives of a DreaMaker Mortgage to determine if it is the right program for them.
Chase DreaMaker Mortgage Pros
Competitive Mortgage Rate Compared to Other Conventional Low Down Payment Programs
For borrowers with good credit scores, the mortgage rate for the Chase DreaMaker Mortgage Program is competitive with and potentially lower than other conventional low down payment mortgage programs such as the Wells Fargo yourFirst Mortgage and Bank of America Affordable Loan solution programs. Paying a lower interest rate save you money on your monthly mortgage payment as well as on total interest expense over the life of your loan. Borrowers with credit scores of 720 and above receive the program's lowest interest rate while borrowers with lower credit scores and higher loan-to-value (LTV) ratios pay higher mortgage rates according to program guidelines.
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Relatively Flexible Borrower Qualification Requirements
The Chase DreaMaker Program applies more flexible borrower qualification requirements than other low or no down payment mortgage programs. For example, the program only requires a minimum borrower credit score of 620, as compared to 660 for other conventional low down payment mortgage programs. Additionally, the program uses a borrower debt-to-income ratio of 45% as compared to 43% - 50% for other standard and low down payment mortgage programs (although some programs allow borrower debt-to-income ratios as high as 55% in certain circumstances). Using a higher debt-to-income ratio enables the borrower to qualify for a larger mortgage amount and potentially afford a nicer home.
No Up-Front Mortgage Insurance and Potentially Lower Monthly PMI Fees
Unlike government-backed low or no down payment mortgage programs such as the FHA, VA and USDA programs, the Chase DreaMaker Program does not require borrowers to pay an up-front mortgage insurance fee. Removing the up-front mortgage insurance fee eliminates thousands of dollars in closing costs for borrowers, making it more affordable to buy a home. In addition to not requiring an up-front mortgage insurance fee, the ongoing monthly private mortgage insurance (PMI) cost for a Chase DreamMaker mortgage may be lower than the monthly PMI fee for a standard mortgage, other conventional low down payment programs or the mortgage insurance premium (MIP) for an FHA loan, depending on your credit score and loan-to-value (LTV) ratio. Additionally, monthly PMI for the program is removed when your LTV ratio falls below 78% as your property value increases or your mortgage balance decreases.
No Restrictions on Property Location
The Chase DreaMaker Mortgage Program does not apply restrictions on where the property being financed is located. Several other low or no down payment mortgage programs including the HomeReady and Home Possible Programs may apply different borrower qualification guidelines, including income limits, depending on where the property is located. These property location restrictions may reduce the number of home buyers who are eligible for those programs and make it more difficult to find a home you can buy using the programs. Eliminating property location restrictions makes the Chase DreaMaker Program easier to use for more home buyers. Additionally, the program applies to owner-occupied single and multi-family properties (up to four units) as long as the borrower lives in one of the units. Some low down payment mortgage programs only apply to single-family residences which limits the properties you can buy.
No Restrictions on Mortgage Type
Unlike some other low down payment programs, the Chase DreaMaker Program applies to both home purchase mortgages and refinances. While cash-out refinances are not allowed, home owners with existing loans with high loan-to-value (LTV) ratios may be able to refinance into a lower mortgage rate and monthly payment.
Low Down Payment Required
The Chase DreaMaker Mortgage Program enables low-to-moderate income borrowers to buy a home with a down payment as low as 3% of the property purchase price. Additionally, the program can be combined with a gift, down payment grant or closing cost assistance program to allow you to buy a home with a lower personal financial contribution. By providing the opportunity to buy a home with little or no down payment, the Chase DreaMaker program makes home ownership more accessible to more people.
Chase DreaMaker Mortgage Cons
Higher Interest Rate Than Government-Backed Mortgage Programs
Although the mortgage rate for the DreaMaker program may be lower than some conventional low down payment programs (depending on your credit score and other factors), the rate is usually .250% - .500% higher than for FHA, VA or USDA loans. Additionally, borrowers with lower credit scores and higher debt-to-income ratios pay higher interest rates with the program. Borrowers should compare the interest rate and fees for the Chase DreaMaker Program with other conventional and government-backed low or no down payment programs to determine the loan with the lowest mortgage rate, fees and total monthly housing expense.
Borrower Income Limits
The Chase DreaMaker Program applies a maximum gross income limit to how much money borrowers can make. A borrower's monthly gross income cannot exceed the median income (AMI) for the area in which the property is located. Borrowers can use Freddie Mac's Affordable Income and Property Eligibility Tool to determine the area media income (AMI) based on property location. The borrower income limit reduces the number of people who can use the program in comparison to the WellsFargo yourFirst Mortgage, FHA and VA mortgage programs that do not apply income limits.
Loan Limits
The Chase DreaMaker Program limits the size of loan you can obtain through the program. The program uses the conforming loan limit, which is $726,200 for a single unit home in the contiguous United States. In Alaska and Hawaii the conforming loan limit is $1,089,300 for a single unit home. People who live in more expensive areas of the country may find that the loan limits reduce their housing options. The loan limits are less of a factor for home buyers interested in less expensive homes.
More FREEandCLEAR Resources
Chase DreaMaker Mortgage Guide
Review our comprehensive overview of the Chase DreaMaker Mortgage Program including program eligibility, borrower qualification guidelines and other important program information.
Mortgage Rates
Borrowers should compare mortgage rates for the Chase DreaMaker Program to other loan programs. Use our mortgage rate tables to view updated interest rates and fees for lenders in your area. Comparing proposals from multiple lenders is the best way to save money on your mortgage.
Comparison of Low or No Down Payment Mortgage Programs
Review and compare multiple conventional and government-backed no or low down payment mortgage programs to understand key program benefits and eligibility requirements.
Sources
"DreaMaker Mortgage." Choosing a type of mortgage. Chase, 2019. Web.