Citibank HomeRun Mortgage Pros and Cons
The HomeRun Mortgage Program offers borrowers multiple advantages including a market mortgage rate, no private mortgage insurance (PMI) fees and no restrictions on property location. HomeRun Program considerations include a higher minimum borrower financial contribution, higher down payment requirement for two unit properties, higher interest rate as compared to government-backed mortgage programs, borrower income limits and loan limits.
We review the full list of the pros and cons for the HomeRun Mortgage Program below. Borrowers should understand both the positives and negatives of a Citibank HomeRun Mortgage to determine if it is the right program for them.
Citibank HomeRun Mortgage Pros
Low Down Payment
The Citibank HomeRun Mortgage Program enables you to buy a home with a down payment as low as 3% of the property purchase price for a single family home, 5% for a condo or co-op and 10% for a two-unit property. Saving enough money for a down payment is one of the biggest obstacles to home ownership for many people. By providing the opportunity to buy a home with a small down payment, the HomeRun Mortgage Program makes home ownership more achievable for low-to-moderate income borrowers. Please note that the HomeRun Program requires borrowers to make a minimum personal financial contribution of 1% toward the purchase price for a single family home.
Market Mortgage Rate
The HomeRun Mortgage Program offers borrowers market mortgage rates that are competitive to other conventional low down payment programs. Paying a lower interest rate saves you money on your monthly mortgage payment as well as on total interest expense over the life of your loan. Please note that HomeRun Program borrowers with higher credit score pay lower mortgage rates while borrowers with lower credit scores pay higher rates.
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No PMI (Private Mortgage Insurance)
One of the main advantages of the HomeRun Mortgage Program is that it does not require borrowers to pay private mortgage insurance (PMI). Several low or no down payment mortgage programs, such as the FHA and VA programs, require borrowers to pay an upfront mortgage insurance fee. Other programs such as the HomeReady, Home Possible, FHA and USDA mortgage programs require borrowers to pay an ongoing monthly mortgage insurance fee. By not requiring PMI, the HomeRun Mortgage Program lowers your mortgage closing costs and potentially reduces your total monthly housing expense (mortgage payment plus property tax, homeowners insurance, mortgage insurance and HOA fees, if applicable) as compared to other low or no down payment programs.
No Restriction on Property Location
The Citibank HomeRun 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 or make it more difficult to find a home you can buy using the programs. Eliminating property location restrictions makes the HomeRun Program more accessible for more home buyers. Additionally, the program applies to owner-occupied single and two-unit properties as long as the borrower lives in one of the units.
Both First-Time Homebuyers and Repeat Buyers Are Eligible
HomeRun mortgages are available to both first-time homebuyers and repeat buyers. This makes the program accessible to more people in contrast to other programs that are exclusively for first-time buyers. Even if you previously owned a home, you may still be eligible for the program.
Applies to Both Home Purchase Loans and Refinances
Borrowers can use the HomeRun Program to both buy a home or to refinance an existing mortgage, although cash-out refinances are not allowed according to program guidelines. Refinancing into a HomeRun loan may enable you to lower your mortgage rate or eliminate PMI. The flexibility of the program is a key advantage for borrowers.
Citibank HomeRun Mortgage Cons
Requires Higher Minimum Borrower Financial Contribution Than Similar Programs
The Citibank HomeRun Program requires that borrowers make a personal financial contribution of at least 1% of the purchase price of the home as compared to other low or no down payment programs that do not require borrowers to make a personal financial contribution. For example, the FHA and HomeReady Mortgage Programs enable borrowers to pay for all of their required down payment by using a down payment grant or a gift. Down payment grants and gifts are permitted under HomeRun Program guidelines but borrowers are required to contribute a minimum of 1% of the down payment from their personal funds for a single family property. Borrowers are required to contribute 5% of the down payment for a two unit property.
Borrower Income Limits
The Citibank HomeRun Program applies a maximum gross income limit to how much money borrowers can make. A borrower's monthly gross income cannot exceed 80% of 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. Please note that the Wells Fargo yourFirst Mortgage Program, FHA and VA mortgage programs do not apply income limits and Chase DreaMaker Mortgage and Bank of America Affordable Loan Solution Programs apply higher borrower income limits.
Loan Limits
HomeRun guidelines limit the size of loan you can obtain through the program. The program uses the conforming loan limit, which ranges from $726,200 to $1,089,300 for a single unit property in the contiguous United States. In Alaska and Hawaii the conforming loan limit is $1,089,300 for a single unit property. Although the HomeRun Program applies loan limits, it does permit mortgage amounts above the general conforming loan limit for higher cost areas. Some low down payment programs do not permit mortgage amounts to exceed the general conforming loan limit. The loan limits are less applicable to home buyers interested in less expensive homes.
Higher Mortgage Rate than Other Government-Backed Low Down Payment Programs
The mortgage rate for a HomeRun mortgage is usually .250% - .500% higher than the interest rate on an FHA, VA or USDA loan. Additionally, borrowers with lower credit scores and higher debt-to-income ratios may pay higher interest rates with the program. Borrowers should compare the interest rate and closing costs for the HomeRun Mortgage Program with other low or no down payment programs to determine the mortgage with the lowest interest rate, fees and total monthly housing expense.
More FREEandCLEAR Resources
Citi HomeRun Mortgage Guide
Review our comprehensive overview of the Citibank HomeRun Mortgage Program including program eligibility, borrower qualification requirements and other important program information.
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.
Mortgage Rates
Borrowers should compare mortgage rates for the Citi HomeRun Mortgage Program to interest rates for other programs. Use our rate tables to view updated interest rates and fees for lenders in your area. Comparing quotes from multiple lenders is the best way to save money on your mortgage.
Sources
"HomeRun Mortgage." Buy a Home. Citi, 2020. Web.