The Low Interest Rate Program You Probably Haven’t Heard About

by Joe Marhamati

If you’ve never heard of NACA you aren’t alone, but with perks that you can’t find easily elsewhere, it is a very enticing program for prospective homebuyers.

The Neighborhood Assistance Corporation of America (NACA) is a non-profit advocacy group that provides the opportunity to take advantage of below-market interest rates with little to no closing costs. Started in 1988 by Bruce Marks as a lobbying group for low and moderate income individuals to attain homeownership, NACA is now in over 30 cities. Its self-proclaimed “confrontational community organizing” has been fodder for many news outlets who cover their rallies from the steps of large banks they believe abuse the middle class to Fannie Mae and Freddie Mac where they quite literally park U-Hauls full of property from distressed homes.

The documentary outlining the history of the organization makes a trip to an informational session worthwhile, but so are the interest rates that you can take advantage of if you become a member. Once a member, NACA not only pays the majority of your closing costs, but buyers are given below-market rates that can be bought down literally as far as they want. Similar to points on a mortgage, you can pay more upfront to have a lower interest rate (.25% lower for every 1% of the mortgage amount paid upfront). NACA works mainly with Citigroup and Bank of America, and ordinarily requires that you go through one of these lenders with a 30-year fixed rate mortgage only, eschewing any exotic mortgage packages in favor of a straightforward plan. While there are no income limits to participate in NACA, there are limits to the purchase price of a home, based on its characteristics. For instance, the max price for a one-bedroom condo in DC is $367,790, with limits ranging from $464,449 to $675,000 depending on the size of the home. Also, members cannot be homeowners when they join.

NACA also offers the chance to refinance, with its Home Save program, aimed mainly at helping victims of predatory lending to restructure their current mortgage. It is not uncommon for those who participate in Home Save to significantly reduce their mortgage payments. For this reason, it is highly recommended to those underwater on their mortgages, or who simply bought when interest rates were high.

In order to take advantage of the low rates, NACA requires that you participate in five activities a year to further the mission of the organization and pay a small membership fee. Also, buyers cannot rent their property out and live elsewhere, as the intent of NACA is to help only those who plan to purchase for themselves. For this reason, NACA places a permanent “ghost lien” on the property just in case you decide to leave town and rent it out anyway.

The main drawback of the process is that it can be long and cumbersome, but for someone who knows they want to buy in the next 6-8 months it could be great. The delays are mostly the result of extensive due diligence by its loan officers and a series of procedural hurdles that determine how much you qualify to borrow. Expect to meet with your loan officer a few times, with repeated requests for materials confirming your income and expenses.

While at times the sheer length of the process and amount of information and follow-ups required to see it through can be daunting, from this author’s experience, the rewards were worthwhile. If you know that you will be in a property for at least five years, the ability to pay down the interest rate to a number of your choosing, is an attractive means of dramatically lowering the overall interest paid to the bank throughout the life of the loan.

This article originally published at http://dc.urbanturf.com/articles/blog/the_low_interest_rate_program_you_probably_havent_heard_about/2068


  1. Wydler Brothers Realty Team said at 8:46 pm on Thursday May 13, 2010:
    Joe - great post, informative breakdown. We've helped dozens of buyers find new homes across DC-area, but the trick is then finding a way to finance the transaction (a daunting task for many). Particularly with the homebuyer's tax credit having expired, NACA seems another potential aid for prospective homebuyers.
  1. Fred said at 2:40 am on Friday May 14, 2010:
    So, how would NACA treat the rental issue for a member of the military who gets deployed for two years or a State Department employee who is posted abroad? Would these individuals be expected to leave their homes empty for several years without the prospect of rental income. Personally, I would rather have tenants living in the space.
  1. Linda Chaletzky said at 4:00 pm on Friday May 14, 2010:
    Interesting program..DC only or MD and VA also?
  1. Brenda said at 4:10 pm on Friday May 14, 2010:
    No, this program is in DC, MD and VA. I bought my condo through NACA and I will never buy another one OUTSIDE of that organization. IF your affairs are in order (you are showing that you are a consistent saver, if your credit isn't horrible, etc) the process is very smoothe.
  1. Jon said at 6:17 pm on Friday May 14, 2010:
    It is a good program but honestly as a Realtor who has been on both Seller and Buyers side of transactions involving NACA I would warn its not your typical process. They very much like to control the process which can mean significantly delayed settlements. They not only control mortgage but settlement. I'll never forget for one DC transaction we had to settle in Baltimore. It also closed 45 days later than it was supposed to. Now this is not to be the doom and gloom post! Really they are a good program. The rate is great and if you have cash lying around you can buy down the rate which makes it excellent! Just be aware its not the easiest program out there. I would put it on the same level in terms of hassle as HPAP for those who are familar with them.
  1. Star45 said at 6:39 pm on Friday May 14, 2010:
    I purchased my first home through NACA 12 years ago, and I would strongly recommend them to first-time homebuyers. The process didn't take long, but if it had, it would have been worth the wait. Besides the benefit of getting a good interest rate, they protect you in the homebuying process - from beginning to the end - ensuring that those in the mortgage industry are not taking advantage of you.
  1. Janson said at 7:35 pm on Friday May 14, 2010:
    I also used NACA and found the process thorough but imminently doable. The cost savings are astronomical. My rate is fixed at 3%, which means I'm never selling or moving. One correction: the "ghost" lean is removed after 10 years as is the $50/month NACA fee/insurance associated with the mortgage. This program really is astonishing. Do remember however that the counselor works on commission and that the commission is inverse in size to your income. the more you earn, the less the counselor gets. Just food for thought, not a criticism.
  1. Mr. Galt said at 4:01 pm on Monday May 17, 2010:
    I am an agent on the selling side of a transaction with a NACA purchaser. The lender has had extensive delays and I don’t think that the article portraying the delay as a part of "due diligence" is at all correct but rather that the people at NACA seem to be completely inept. I’d also like to add that it is probably in Citigroup’s and B of A's best interest to put as much red tape into the process to slow or kill these deals as they loose money on every one. The benefit to them is that they probably get to meet there CRA requirements(which we all know is the program that got us into the mess we're in.) My advice to you listing agents out there is if an offer comes in and NACA is involved; MOVE ON TO THE NEXT ONE!!!

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