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You can’t use the program to buy a second home or an investment property. This includes single-family homes and units in condos, co-ops, and other mixed-use buildings. You can only use the NACA purchase program to buy an owner-occupied primary residence. You must keep this money in savings throughout closing. NACA will require that you save an extra $300 every month (for a minimum of 3 to 6 months) before you’re qualified. Let’s say you pay $1,000 per month for rent, but your new mortgage payment will be $1,300 per month. If your new mortgage payment exceeds your current rent, you’re required to maintain a “payment shock” savings to compensate for the payment difference. This is known as your debt-to-income ratio or DTI.Īlso, NACA limits borrowers’ mortgage payments to 31 percent of their gross monthly income.įor instance, if your pre-tax monthly income is $4,000, your monthly mortgage payment would have to be $1,240 or less to be eligible for the NACA program.

Debt-to-income ratioĪs a general rule of thumb, your total monthly debt payments - including your future mortgage payment - shouldn’t exceed 40 to 43 percent of your gross monthly income. In 2023, the limit for a single-family home is $ in most areas, and $ in high-cost areas. NACA loans cannot exceed the conforming loan limit for an area. NACA is open to people of all income levels, but the program works best for those who earn less than their area’s median income.įor example, borrowers whose incomes exceed the median income for their area can use the program - but only if they’re buying a home in “priority areas.” These are usually low-to-moderate income communities.īuyers who earn less than their local median income can buy a home anywhere in the area. Most programs for lower-income borrowers set income limits. If your credit score falls short of the typical minimums, NACA’s approach could be invaluable. NACA wants to see you’ve consistently paid your rent and other obligations on time over the last year. Instead, the program examines your payment history over the previous 12 months. NACA, on the other hand, doesn’t rely on credit scores. With most mortgage programs, you typically need a minimum credit score of 580 to 620 to qualify. Not sure whether you need NACA’s guidance? Learning how the program works can help you decide: NACA credit requirements But if you can qualify for an affordable mortgage on your own, you won’t need this extra support. If you need NACA’s help to achieve the American Dream of homeownership, these extra steps will be worthwhile. Instead, you’d need to complete the entire NACA process, join the advocacy group, and work with a counselor who analyzes your personal finances. The catch? You can’t walk into a bank, or contact an online lender, and ask for a NACA loan. This helps lower their monthly mortgage payments and make homeownership more affordable.īuying a home with no down payment or closing costs probably sounds like a pretty good deal. NACA members also pay below-market mortgage rates. The program is unique from other mortgage programs because borrowers can buy a home with: The NACA Best in America Mortgage seeks to help people overcome these, and other, barriers to homeownership. You might also pay higher interest rates when you have a low credit score. Then, there’s the extra cost of private mortgage insurance. Here’s what you should know.Įven when you’re buying a modestly priced home - one with a purchase price of $200,000 or so - you may still need $12,000 or more for the down payment and closing costs. This nonprofit advocacy group has helped thousands of families buy homes. And borrower requirements - like credit score and income thresholds - are very lenient. The Neighborhood Assistance Corporation of America (NACA) helps remove some of the obstacles to homeownership for borrowers in need through its NACA program.Ī NACA mortgage requires no down payment or closing costs. Febru10 min read What is the NACA program?