Minimum Down Payment Loan Program

Are You A First-Time Homebuyer?

HNB Mortgage seeks to help first time homebuyers and repeat buyers alike. If you have not owned a home in the past 3 years, you are considered a first-time homebuyer!

HNB Mortgage is focused on helping minorities, millennials, and mixed families on their road to homeownership.

HNB Mortgage goes beyond the flexibility of most our competitors to create a custom process for each homebuyer.

HNB Mortgage is on a mission to make home buying easier. We are proud to offer specialized Fannie Mae and Freddie Mac loan programs that could make you a homeowner in 2021!

Here are few of the highlights of the loan program:

• As little as 3% down payment
• Lower private mortgage insurance costs
• Down payment sources include gifts, cash-on-hand, and down payment assistance programs.
• Use income from non-occupant co-borrowers to qualify
• Income from non-borrowing household members helps your approval.
• “Boarder income” (income from a roommate) helps you qualify.
• Use rental income from a basement apartment or mother-in-law unit.

Click here to APPLY NOW.

Still have questions? Read on to learn more about these programs.

Flexible on Down Payments

Down payments have been one of the toughest parts of breaking into homeownership. According to a Trulia report, 58% of renters ages 18-34 said the down payment was the number one obstacle to owning a home.

Down Payment Source

• These programs only require as little as 3% down. Even better, the source of that 3% is very flexible.
• 100% of the down payment can come from a down payment gift. A parent or other relative can fund the entire amount of down payment and closing costs.
• The buyer can also receive a grant from an approved down payment assistance source. Many cities and states around the country offer down payment assistance programs that cover up to 100% of the required down payment.

Cash-On-Hand Down Payments

• Homebuyers also have the ability to use cash-on-hand. Many people save cash in a safe place at home rather than in a traditional savings account.
• Most mortgage programs require an applicant to open a bank account, deposit their cash and wait 60 days. After two months, the borrower can submit bank statements that do not show an unexplained bank deposit. Certain loan programs offered by HNB Mortgage allow a potential home buyer to apply immediately.

Click here to APPLY NOW.

Many Income Sources Can Help You Qualify

Regular Income

Borrowers can use employment income, commission, bonus, and even tip income to qualify.

Household Income

Home buyers can use income of household members who will not be on the loan. This feature works great for multiple families living in one home, parents living with children, or unmarried couples where only one individual wishes to be on the loan. The non-borrower’s income must be used as a compensating factor – not for qualification. This means that HNB Mortgage will not add your household member’s income to your income to make an approval decision. Rather, the non-borrower’s income will be considered a reason to approve a borrower even though his or her debt-to-income ratio is over 45%.

Debt-to-income ratio is determined by two factors: 1) the amount of the future house payment plus all other required monthly debt payments, and; 2) gross income.

For instance, someone making $4,000 per month and $2,000 in housing, credit card, and student loan debt payments would have a 50% debt-to-income ratio.

Normally such a home buyer would not qualify. The maximum debt-to-income is 45%. Yet additional income from household members could help HNB Mortgage approve the loan above the 45% mark, even though the borrower is not technically within guidelines.

Please note that every situation is different so check with a Loan Consultant to see if household income can help you qualify for this program.

Co-Signer Income

These loan programs may also allow income from non-occupant co-borrowers. This is the term used for co-signers of the loan who will not live in the home.

For instance, parents who already own a home can co-sign their child’s mortgage loan. HNB Mortgage will use their income along with the main borrower’s income for qualification.

Boarder/Roommate Income

In addition, the home buyer can use “boarder” income to qualify. A boarder is basically a roommate or someone renting space in your household. To use this income, you must document rental payments and a shared living situation for the previous 12 months.

This feature makes homeownership much more feasible. Be sure to confirm your roommate will move into your new home with you. If so, they will be helping you qualify –and pay for – your mortgage!

Mother-in-law Units/Accessory Dwelling Units (ADUs) Rental Income

If the home you plan to purchase has a basement apartment, mother-in-law unit above the garage, or other accessory unit, you could use rental income to qualify.

Even if you do not currently have a roommate, you can find a renter for the additional unit in the new home and use proposed income to qualify. Unlike boarder/roommate income, you do not have to have 12 months history of shared residency.

You do not need previous landlord experience or education to use income from an ADU renter. Keep in mind that the home must be classified as a 1-unit home with an ADU, not a 2-unit home. Using rental income is still possible when buying a 2-4 unit home, but you may need landlord education and/or experience.

Income Limits

Please know that income limits for these special loan programs are intended to ensure that the programs are reserved for applicants who need it most.

Income limits are set by geographical areas. In underserved areas, there are no income limits. In more economically developed areas, Fannie Mae and Freddie Mac have limited the amount of money applicants can make. The following is a breakdown of income limits:

• Properties in low-income census tracts: no income limit
• Properties in high-minority areas and designated disaster areas: 100% of the area’s median income
• Properties in any other area: 100% of the area’s median income

For instance, a home buyer in Los Angeles County finds a home within an area that limits income to 100% of the median income. The median income for Los Angeles is $67,200 so that is the most the buyer can make and still buy the home. If the borrower makes more than this, he or she could find a home in an underserved area with no income limit.

Be sure to check the property address of the home you want to buy and your income with your HNB Mortgage Loan Consultant.

Click here to APPLY and see if your income is within limits.

HomeReady Credit Score Minimums

Applicants don’t need perfect credit to qualify. In fact, FICO scores down to 620 could be approved.

A credit score of at least 680, though, will yield the best rates. Fannie Mae and Freddie Mac may waive some upward rate adjustments for borrowers with a 680+ score. This means tbat higher credit borrowers can receive a better rate for a 3% down loan than would 20%-down borrowers.

Lower Mortgage Insurance Costs

Fannie Mae has reduced the amount of required mortgage insurance coverage. This translates to lower cost for the borrower.

Private mortgage insurance (PMI) would cost around $230 per month on a typical 3% down loan of $250,000, according to MGIC’s Rate Finder. Under the Fannie Mae and Freddie Mac loan programs, PMI is just $160 per month. The $70-per-month savings allows buyers to afford more home for the same amount of money.

Home Buyer Education

All buyers who use the program must complete home buyer education. The course is provided online and can be done according to the individual’s own pace and schedule.

There is a small fee of $75 for the education – a small price to pay for the flexibility of the program.

New homeowners benefit greatly from pre-purchase education. It’s hard to know all the ins and outs of homeownership by researching on your own. Going through formal training is a great idea for first time home buyers whether or not they use these specific loan programs.

It’s a great time to see if you qualify. Checking your eligibility is a great way to start your homeownership journey.

I’m ready to APPLY.