Is the dream of home ownership dying? While most Americans say owning their own home is part of the American dream, many people feel that dream is fleeting. According to adults who rent, over half of them (54%) say they don’t think they’ll ever own a home. Many of those who rent depend on family to keep their rent afloat or make substantial sacrifices to pay their rent.
What’s holding most people back from owning their own home? While there may be several reasons, nearly half of non-homeowners say they can’t afford a down payment. Thankfully, the Neighborhood Assistance Corporation of America (NACA) is here to help individuals achieve homeownership in a nontraditional way.
What Is NACA?
NACA provides a mortgage program that helps low- and moderate-income individuals and families achieve homeownership. Getting a mortgage through the NACA route alleviates some of the pain points that keep Americans from homeownership, like down payments, closing costs, and other criteria associated with their credit. So, it makes the home-buying process more achievable than taking the traditional route through banks or other conventional mortgage lenders. This aligns with NACA’s mission to promote homeownership in underserved communities and combat unfair lending practices.
What Makes NACA Different?
NACA is a certified nonprofit organization dedicated to helping individuals and families that would otherwise be turned from homeownership by conventional avenues become homeowners. To do this, there’s an application process and a comprehensive educational component that helps to prepare borrowers for homeownership.
Here’s what makes NACA stand out from traditional banks and conventional mortgage lenders:
- Borrowers are not required to make a down payment.
- Third-party fees like title insurance, application fees, and other fees that make up the closing costs are eliminated.
- Most mortgage lenders include private mortgage insurance, which is added to the mortgage payment. This can be a significant amount for the borrower. NACA eliminates that cost.
- NACA’s interest rate is more favorable than the market average, which is what most mortgage lenders use.
- NACA considers each borrower’s financial situation rather than relying on numbers from their credit score.
- Comprehensive counseling is required to ensure the borrower is ready for the responsibility of homeownership.
Who Qualifies for NACA?
There are several qualifying factors NACA considers for its borrowers. They look at the same factors as traditional banks and conventional mortgage lenders, but they look at them differently. For instance, rather than relying on your credit score alone, NACA will take into account your payment history over the past 12 months. And while their program is open to everyone, it works best for those who may earn less than the median income for their area.
Debt-to-income ratio is best favored when it doesn’t exceed 43% of your income, and mortgage payments are limited to 31% of a person’s gross monthly income. In addition, loan amounts are limited, and the purchase price should not exceed the conforming loan limit for a particular area.
NACA expects all borrowers to become a member of NACA, and membership dues are currently $25 a year. As a member, you’re pledging to volunteer for NACA’s advocacy campaigns when they come to your area.
How To Get Started With NACA
Attending a NACA workshop is the first step in getting started with NACA. This four-hour workshop provides all the details you need to know about getting a mortgage with NACA. It will help you to know how to become mortgage-ready and NACA-qualified. Completing the workshop gets you access to the member portal where you can sign up to become a NACA member. From there, you can schedule an appointment with your NACA counselor, who will then work with you to get you qualified for your mortgage with NACA.
Check here to learn of a workshop near you. I recently searched and found four workshops within 70 miles of where I live coming up within the next two months.
The Bottom Line
The dream of homeownership is dying for many of us. NACA has found a way to revive that dream and keep it alive. If you’ve given up on owning your own home or feel NACA may be the best path toward acquiring your home, search for a NACA workshop near you.
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