Upper Darby, PA · Member since 2013 · 146 posts · 7 votes
Has anyone worked with NACA before to get an OO mortgage. It looks awesome on paper; however, whenever something looks to good to be true I like to put the feelers out a bit. Below is the link to the website if that helps jog anyone's memory.
https://www.naca.com/nacaWeb/index_main.aspx
We've sold over a dozen houses to NACA buyers (it was our secret selling weapon for a couple years when we knew many of the NACA real estate agents very well)...
The program is for real, despite it sounding too good to be true. The downsides are that the approval process will take some time and patience (group meetings, 1-on-1 financial counseling, long approval process, etc), but if you can deal with the time and all the meetings, you'll potentially get a zero-down mortgage with a near-zero interest rate.
The best part is, NACA has a fantastic track record. Their default/foreclosure rate over 10+ years is less than 1%, as they are very serious about ensuring that they don't over-leverage their borrowers (their DTI requirements are strict), and they have contingency plans for borrowers who get into payment trouble (they'll actually take over payments for periods of time until the borrower gets back on their feet).
If you're a NACA borrower, you will be required to volunteer at future NACA events (certain number of hours per year) and NACA isn't available in all cities, so not everyone is going to have them as a resource. Also, you can't ever rent out your property if you have a NACA loan, so you can't ever convert your property to a rental.
Also, NACA tends to focus to lower-income areas and lower-credit borrowers, but it's certainly not restricted to those areas or buyers. In fact, my sister-in-law -- who makes a lot of money and had lots of financing options -- bought an expensive duplex in a nice part of Buffalo using a NACA loan...no money down and an interest rate below 2% (used seller contributions to buy down the rate).
@Nefera Croom Thanks for the update, never knew about NACA's program until now. Is it possible you can share the #'s. Also were you able to negotiate a deal on purchase price to meet your cash on cash return or cashflow criteria considering how expensive Brooklyn is?
@Nefera Croom Thanks for the update, never knew about NACA's program until now. Is it possible you can share the #'s. Also were you able to negotiate a deal on purchase price to meet your cash on cash return or cashflow criteria considering how expensive Brooklyn is?
NACA cannot be used to purchase an investment property.
@J Scott if @Nefera Croom purchased a 3 family home and lived in one of the units, while collecting rent to pay down mortgage isn't that technically an investment property?
Do you know if there are any penalties they impose on you for refinancing to a non- NACA lender?
I am scheduled to go to one of their workshops, however , I am moving to a new area (Charlotte), and would like to purchase something in the next 3-4 months, so not sure if it could work.
Do they finance the rehab part of a property? Also considering 203 K.
Also , got your book J, nice work and hope to put it to good use soon!
There are no penalties for refinancing a home bought through NACA. However, you do need to submit a request for a release of the $25,000 lien NACA places on the property to guarantee owner occupancy.
Tim - There is another thread where the discussion has evolved to the discrimination by realtors/sellers against NACA borrowers because of the reputation NACA has. I'd really like your input. How is NACA addressing this discrimination? Is NACA aware that the approval letters are causing more uncertainty and raising questions about the borrower's fitness? Clearly that wasn't the intention, but that's how it is being perceived by the sellers.
@J Scott can you confirm the downside of it is that you have to live in the property for the duration of loan and is not Able to refinance? I know it’s been close to 5 years since this post but any advice would help.
@J Scott can you confirm the downside of it is that you have to live in the property for the duration of loan and is not Able to refinance? I know it’s been close to 5 years since this post but any advice would help.
You are allowed to refinance or sell. You are not allowed to move out and rent the property for as long as you have the NACA loan.
Regarding refinancing/moving out, what is the best option to pay off the NACA Mortgage (not including cash)
I was thinking of buying our first MF Property with a NACA Mortgage and then use an FHA First-Time Home Buyer Mortgage (one mortgage in my name, the second in my wife's name) for the second property.
Motivation: Buy more properties sooner, lower downpayments and interest rates.
Is it realistic to qualify for 3 mortgages in a time period of 2-4 years?
Step 1: buy 4-Plex with NACA Mortgage Step 2: save for FHA Down Payment (We're already doing this) Step 3: Refi 4-Plex - pay off NACA Mortgage Step 4: buy second 4-Plex with FHA - new primary residence Step 5: save for third property down payment (or private and hard money) Step 6: Buy third multi-family property (first "investment" property)
Probably need to verify Step 4. "Individuals and spouses without ownership of a principal residence during the past three years." under FHA Loan Requirements
Thank you all for all the info. I decided to give it a try. I'm in MD, working with the NACA office in DC. Here is my timeline; so far so good:
- June 4, 2022: Buyer workshop
- Aug 10, 2022: Counseling appt. The meeting went very well. The counselor, Brittany Nickens, was amazing. She's super patient, highly engaged, and knowledgable.
- My next step is to provide some information about payment shock, and changes in addresses.
I also have a similar concern about the potentially long process, but will first fulfill all tasks on my end as quickly as I can. Will keep you updated (in real time :) )
Thank you all for all the info. I decided to give it a try. I'm in MD, working with the NACA office in DC. Here is my timeline; so far so good:
- June 4, 2022: Buyer workshop
- Aug 10, 2022: Counseling appt. The meeting went very well. The counselor, Brittany Nickens, was amazing. She's super patient, highly engaged, and knowledgable.
- My next step is to provide some information about payment shock, and changes in addresses.
I also have a similar concern about the potentially long process, but will first fulfill all tasks on my end as quickly as I can. Will keep you updated (in real time :) )
Awesome to see you have started the process. I am currently in the process of searching for a home with the NACA loan. It took me about 6 months to reach that point, but I needed to wait for tax information from this year to come out which was a roadblock. Feel free to reach out with any questions!
What I've heard is that you shouldn't use a NACA for investment unless you plan on staying in the unit for at least three years. After that, you could refi with a traditional mortgage and move on. Why the three-year time frame, I'm not entirely certain. I assume to build enough equity so that the mortgage payments don't outpace the cash flow.
I'd like to use this program for a Multi-Family home, and reside in one of the units while renting out some of my primary unit via AirBnB, and have a yard that could be monetized through Sniff-Spot while I live there. The way I understand it, the only requirement is that I'd have to reside on the property. I'm just not sure if all this is allowed.
I'm trying to get set up to do this in the East Phoenix Metro. I'm pretty handy and would love to save on reno costs by updating and renovating with my own hands. I'm also self-employed grossing around 100K, will be student loan free by the end of the year, and car loan free by April of 23'. Does anyone know any reasonable objections to this rough draft? Beyond the three-year stay, I'd move out and use property management. Thanks for any opinions/advice.
Thank you all for all the info. I decided to give it a try. I'm in MD, working with the NACA office in DC. Here is my timeline; so far so good:
- June 4, 2022: Buyer workshop
- Aug 10, 2022: Counseling appt. The meeting went very well. The counselor, Brittany Nickens, was amazing. She's super patient, highly engaged, and knowledgable.
- My next step is to provide some information about payment shock, and changes in addresses.
I also have a similar concern about the potentially long process, but will first fulfill all tasks on my end as quickly as I can. Will keep you updated (in real time :) )
Hi, any update on your progress? Did you end up going through with NACA or going an alternative route?
What I've heard is that you shouldn't use a NACA for investment unless you plan on staying in the unit for at least three years. After that, you could refi with a traditional mortgage and move on. Why the three-year time frame, I'm not entirely certain. I assume to build enough equity so that the mortgage payments don't outpace the cash flow.
I'd like to use this program for a Multi-Family home, and reside in one of the units while renting out some of my primary unit via AirBnB, and have a yard that could be monetized through Sniff-Spot while I live there. The way I understand it, the only requirement is that I'd have to reside on the property. I'm just not sure if all this is allowed.
I'm trying to get set up to do this in the East Phoenix Metro. I'm pretty handy and would love to save on reno costs by updating and renovating with my own hands. I'm also self-employed grossing around 100K, will be student loan free by the end of the year, and car loan free by April of 23'. Does anyone know any reasonable objections to this rough draft? Beyond the three-year stay, I'd move out and use property management. Thanks for any opinions/advice.
Hi Tyler, if you read the above posts it's completely okay to live in one unit and rent out other units/bedrooms with a NACA.
There is no current NACA limitation to live in the property for 3 years before refinancing.
Sarah, I used a NACA loan circa 2019. Everything worked out as long as you follow the process. Let me know if you have any other questions.