NACA Loan Overview

What is a NACA Loan?

• NACA: Neighborhood Assistance Corporation of America.
• Lender: Funded by Bank of America.
• Loan Features:
  • Up to a certain amount based on property type (e.g., single family, multi-family up to 4 units).
  • No money down or closing costs.
  • Lowest interest rates in the country, can buy it down further.
  • Rates independent of credit scores, based on credit profile (rent history, no negatives/collections).

Benefits

• Suitable for first-time homebuyers, people with low income, or less-than-perfect credit.
• Can purchase multi-family homes or mixed-use properties (e.g., storefront with apartments).

Qualifications

• Two years of tax history.
• Three years of work history.
• Minimum credit score: 620.
• Bank statements required.
• Employment consistency (two years in the same field, okay to change companies within the field for better pay).

Financial Requirements

• No down payment needed, but advised to save ~3.5% for taxes, insurance, and cushion.
• Payment shock: significant savings required for post-purchase security.
• Save consistently during the process (example: saving $10k initially, ended with $15k).

Interest Rates

• Guaranteed lower than national average, regardless of credit score.
• Example: 2.5% and 0.8% interest rates achieved.
• Lower rates decrease mortgage payment and total interest over time.

Primary Residence Requirement

• Must live in the property for at least five years.
• $25,000 lien on the property decreases by $5,000/year lived.
• After five years, free to refinance or move on.

Loan Terms

• 30-year fixed conventional loan.
• Must deal with document submission and patience.

Process

• Be prepared with documents (taxes, pay stubs, bank statements).
• Expect a lengthy timeline (9 months to a year, or more).
• Patience and organization needed (documents might need resubmission).

Property and Loan Details

• No limits on property price, varies by location and property type.
• Multi-family preferred for income generation.
• Multi-family qualification includes property income.

NACA Challenges

• Understand it's a lengthy process with paperwork and patience required.
• Counselors may not be as experienced as traditional loan officers.
• Prepare for multiple document submissions and possible delays.

Tips for Success

• Approach with patience and proper expectation settings.
• Have a financial cushion before starting the process.
• Understand that investments and property transactions take time and patience.