Homeownership can be a dream fulfilled with the help of NACA, even if you have bad credit. Since 1988 the Neighborhood Assistance Corporation of America (NACA) has been helping distressed homeowners retain their homes, fight predatory lending as well as providing a mortgage loan programs for homebuyers that lack good credit.
Key points in the NACA program
- Borrowers with low credit scores can qualify.
- Borrowers must complete an education session about the program and submit all necessary documents, from income statements to phone bills.
- Borrowers must go through counseling to understand their monthly budget and ensure they can afford the mortgage payment.
- NACA offers below-market interest rates on 15-year or 30-year mortgage loans.
NACA believes in economic justice through home ownership. NACA’s current mortgage rates are highly competitive:
- 6.00% – 30-YR FIXED APR
- 5.50% – 20-YR FIXED APR
- 5.75% – 15-YR FIXED APR
NACA is a non-profit, community advocacy and homeownership organization with access to 13 billion in mortgage funds for primarily low- and moderate-income people and people purchasing in low- moderate-income communities. But NACA is open to everyone.
There is no eligibility limitation based on one’s income, credit score or other criteria as long as certain requirements are met.
According to their website “NACA ‘s track record of helping people who have credit problems become homeowners or modify their predatory loan debunks the myth that high rates and fees are necessary to compensate for their credit risk.”
NACA must qualify you
To qualify for a NACA Mortgage you must go through an extensive analysis of your finances to determine whether you are ready for homeownership and what monthly mortgage payment you can comfortably afford.
Depending on your situation, this process can take one session, 6 months, or longer. The first steps are to attend a NACA Workshop; get a NACA Member ID, and get assigned to a NACA Agent.
NACA Eligibility Criteria
There are several requirements that must be met.
- Member must not own another property when they close on the NACA mortgage.
- Member must occupancy the home as long as they have a mortgage obtained through NACA.
- Members need to participate in whatever way they feel comfortable and adhere to NACA’s policies and procedures.
Benefits of a NACA Mortgage
The major benefit of a NACA Mortgage is the low-interest rate. NACA offers borrowers a below-market, 30-year, fixed-rate – the interest rate is less than the market rate for a conventional “A” credit loan. The current rate national rate is 6.59% according to Zillow (as of 07/31/2023). But that’s not the only benefit:
- No Downpayment – NACA mortgage offers 100% financing of the value of the property
- No Closing Costs
- No Points or Fees
- Below Market 30-year or 15-year Fixed Rate
- Private Mortgage Insurance
- No Credit Score Consideration (approval based on individual circumstances)
- No Predatory Terms (i.e no pre-payment penalty or balloon payments)
- Eligible Properties – one-, two-, three- or four-family owner-occupied principal residences, including units in condos, coops, or combined residential/commercial buildings. Properties may be existing homes, new construction or homes in need of renovation. Eligibility for a condo requires 50% owner-occupancy or a financially strong condo association.
- Renovations/Repairs – Funds for renovations are provided as part of the mortgage with NACA providing assistance throughout the renovation process.
Drawbacks of the NACA Mortgage Program
NACA is an awesome program that makes affordable homeownership a real possibility for people with less than perfect credit and little to no savings. But there are drawbacks.
- NACA is under-staffed in some states
- Lots of paperwork required (sometimes it’s necessary to submit the same paperwork repeatedly)
- The mortgage loan process can take much longer than expected. To combat the lengthy process it may be better to work with a realtor that is familiar with NACA’s mortgage program. Members can utilize a real estate agent of their choice
- You may have to switch NACA counselors to speed the process.
In the final analysis, NACA is one of the best mortgage programs available to consumers with problem credit. If you can withstand the heavy document requirement, workshops, and overworked counselors it’s worth every moment.
There are few, if any, mortgage programs that offer low “A” credit mortgage rates, no downpayment, and no fees to anyone who can meet NACA’s eligibility requirements.
Bruce Marks, CEO of NACA, said “The underwriting of our loans is flexible and character-based. We do not review an applicant’s credit score, but rather we look at their individual circumstances.” “This allows NACA to consider only the debts that the borrower controls,” Marks added.
“For example, we would not penalize borrowers for late payments on unaffordable but necessary medical expenses. That is a reflection of the lousy health-care system in America, and not the borrowers’ ability to be a homeowner.” For more information visit NACA here.