BBVA Compass launches zero-percent down mortgage program "HOME Program" is designed to boost homeownership
In recent months, the Obama administration has taken several steps to expand the credit box and make it easier for borrowers, especially first-time homebuyers, to buy a home. To that end, in October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.
For some borrowers, saving up 3% for a down payment is still a hurdle they can’t quite clear. However, a new program from BBVA Compass (BBVA) will allow borrowers to put down even less for a down payment, in fact.
BBVA Compass announced the launch of a new program, called Home Ownership Made Easier or HOME for short, designed to help low- and moderate-income borrowers become homeowners by helping to overcome one of the “most significant barriers” to homeownership, the down payment.
In the HOME program, qualifying borrowers will be eligible to finance 100% of the home’s value. In addition to offering 100% LTV loans, BBVA will also contribute up to $4,500 toward “certain closing costs” associated with obtaining a home loan.
"We've built a comprehensive program that will help many people across our footprint realize the dream of homeownership — something that may have seemed unattainable to them in the past," said Eduardo Castaneda, executive director of real estate lending for BBVA Compass. "The financing and closing cost assistance, and the essential homebuyer education, will help ensure they enjoy the benefits of their new home for years to come."
According to BBVA Compass, the HOME program is part of the bank’s recent commitment to put $11 billion in lending, investments and services toward supporting low- and moderate-income individuals and neighborhoods.
Under the HOME program, there will be no private mortgage insurance requirements.
But not every potential borrower is eligible for the HOME program. According to BBVA Compass, the subject property must either be located in a low-to-moderate income census tract (as determined by the Federal Financial Institutions Examination Council) or the loan applicants cannot have an income greater than 80% of the median income for the area, per the guidelines from the U.S. Department of Housing and Urban Development.
According to BBVA Compass, other benefits of the HOME program include:
Borrowers can move into a new residence with as little as $500 of their own funds
BBVA Compass may even pay certain closing costs up to $4,500
Seller funds and cash gifts can be used to pay remaining closing costs and so-called "prepaids" — expenses such as taxes and insurance that must be paid at closing before they are technically due
No Mortgage Insurance (MI) – keeps monthly payments affordable
Fixed Rate – Monthly principal and interest payment are fixed
Credit Scores as low as 620 may be eligible
The program offers flexible fixed-rate mortgage terms, with 30-, 25-, 20-, 15- and 10-year options available
The HOME mortgage is also available to borrowers with higher incomes if they're financing properties in low- or moderate-income census tracts
"In some cases, clients participating in the bank's HOME program will pay a monthly mortgage payment that is less than what they currently pay as renters," Castaneda said. "And that's an important point: This program will be helping people who've already proven their ability to make that monthly payment."
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