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NACA can make homeownership possible with credit problems


Homeownership can be a dream fulfilled with the help of NACA. 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 program for homebuyers.

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 criteria 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, several months, or longer.

Eligibility Criteria

There are 4 eligibility criteria that must be met.

  • Properties must be located in areas where NACA provides services which are large areas nationwide including many states.
  • The purchase price must be less than the maximum purchase price which is sufficiently high for low and moderate income buyers and those looking to purchase affordable properties.
  • Homebuyer must not own another property when they close on the NACA mortgage.
  • Homebuyers need to participate in whatever way they feel comfortable and to 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 is 3.375% (as of 3/03/2016). But that’s not the only benefit:

  • No Downpayment – NACA mortgage offers a 100% financing of the value of the property
  • No Closing Costs
  • No Points
  • No Fees
  • No P.M.I. (Private Mortgage Insurance)
  • Credit Score Not Considered (NACA Qualification based on Member’s 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 not available in all states
  • 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.
  • 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 is 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 4 eligibility criteria.

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.

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