Quote from @Nicholas R Foster:
Quote from @Paul De Luca:
Quote from @Nicholas R Foster:
Hello Bigger Pockets family, hope as is well!
Today I listened to a podcast where the guest speaker spoke upon his real estate journey and how he acquired a multi family unit property with little to 0% down in the Chicago area through a program called NACA. If anyone is familiar with this program I would love to hear your point of view of it, as well as any pros and cons. Thank you!
I actually attended a webinar about the NACA program earlier this week because a client of mine had the same idea. Here are the important factors to consider for a house hacker of a 2-4 unit property when using the program:
NACA's eligibility requirements consist of the following:
- No member of the household can have an ownership interest in any other property at the time of closing,
- Occupy the home over the life of the NACA mortgage
- Participate in five actions and activities a year and at least one prior to NACA Qualification and one prior to closing in achieving NACA's overall mission of economic justice; and
- Be willing to abide by NACA's terms of membership, participation, and eligibility.
Occupancy requirement:
At the time of closing, the house purchased with the NACA mortgage must be the Member's only home. After closing, the property must be the Member's primary residence that he/she occupies. NACA takes out a lien on the home to ensure this requirement. This does not prevent any Member from selling their house, refinancing, or purchasing additional property after closing as long as they meet the occupancy requirement.
NACA puts a $25,000 soft-second lien on the property to ensure that the Member lives in the property for as long as they have the NACA Mortgage. In addition, it ensures any required repayment of any assistance provided by NACA for the mortgage payment.
My client's plan was to live in the property for a year and then refinance, however I explained that you'll only be able to refinance to another loan type if you have enough equity (20-25%). That's unrealistic after a year unless you're doing a certain level of rehab, which it does sound like NACA pays for renovations although I'm unsure how much.
All this information I took directly from their website - https://www.naca.com/faq/gener...
Thank you Paul this was super helpful! My goal is also to live in the residence for a year but that goal does not seem too attainable through the naca program. With my main goal being to house hack a 3-4 unit through owner occupancy then eventually moving out and renting my unit with naca it may take some years to pay off the mortgage. While doing so I will have to live in the property for however long that takes as well. Although I will continue to research on it and follow the accounts provided in this thread.
I just used the NACA program to purchase my duplex. It is a very great program that has allowed me to purchase a home with no money down and get my foot in the door for investing. The program could take a while depending on your own personal journey but it depends on how much money you have saved, how much debt you are in, what your credit is like and how consistent you are with payments etc. The program basically wants to ensure you can be consistent and responsible considering the benefits they offer for homebuyers. Most of the previous details are true with some things I would elaborate on. I did not do any NACA activities prior to closing and I have not been asked to do any as of yet per the requirement (there are no NACA police to constantly check on you that I know of so alot of these actions are in good faith from what I have experienced).
You are required to stay in the home for the time of the mortgage and the lien is the way the ensure this, but this can be removed in certain circumstances that would allow for it such as getting a new job that would require you to move, or a death in the family etc. From what I understand they are more lenient on this than some downpayment assistance programs are. It can be a difficult program depending on your life circumstances so you have to evaluate where you are in life and determine if this would be the best case scenario for you. For me wanting to house hack and knowing I would live there for the life of the loan unless I get a job opportunity elsewhere, it worked out perfectly.
