At a time when home prices and interest rates are placing homeownership increasingly out of reach for first-time buyers, access to down payment assistance (DPA) has never been more important or valuable. In fact, according to a 2023 Bankrate Financial Security Survey, 40% of potential homebuyers cited not being able to afford a down payment was a major reason they haven’t been able to buy a home.
Thankfully, the number of DPA programs available for today’s borrowers continues to expand. Yet for correspondent lenders, navigating the vast array of options can be challenging, particularly if they do business in multiple markets. But there is a way to make everything much easier—not just for lenders, but for borrowers as well.
An Expanding Down Payment Assistance Landscape
Right now, there are more than 2,000 DPA programs nationwide that provide a plethora of options to aspiring low- and moderate-income homeowners. Most of these programs are administered by various state, county and city governmental agencies. However, a growing number of large lenders have also launched 100% financing options aimed at making homeownership more affordable to those who lack purchasing power, sufficient savings for a down payment, or financial help from family members.
Today’s DPA programs vary enormously in terms of how the assistance is structured. For example, some programs offer grants that do not require repayment, while others provide low-interest loans or forgivable loans that can convert into grants if specific conditions are met over a defined period. Some programs are structured as repayable second mortgages, while others offer silent second loans that are deferred until the property is sold or refinanced.
While all these programs share a common goal of facilitating homeownership, they differ tremendously in terms of program details and what borrowers need to qualify. Some options, for example, involve specific requirements involving the borrower’s credit score or income. Some may have geographical constraints, while others may only apply to public employees, such as police officers or teachers. And therein lies the catch.
Sorting Through Multiple Options
While today’s expanding number of DPA programs is generally great news for first-time homebuyers, for correspondent lenders, keeping up with the different options and nuances requires significant time and effort. This is even more challenging at a time when most lenders are trying to cut costs.
For correspondents, maintaining compliance with multiple DPA programs while making sure their lending practices align with the unique stipulations of each program can be especially burdensome. For instance, while there are many different local government programs available, leveraging them is very difficult because lenders have to learn and train their staff on each individual program.
The eligibility criteria and application process for different DPA programs can change often as well, sometimes with little notice. Because the terms are often difficult to understand, simply communicating the details of different DPA programs and how they work to underserved borrowers is yet another hurdle.
So, while DPA programs create excellent opportunities to meet the need of underserved borrowers, managing multiple programs requires a lot of work and meticulous attention to detail. But there is a simpler path.
The Potential Advantages of a Nationwide Down Payment Assistance Provider
A growing number of correspondent lenders are discovering a great way to leverage DPA for first-time homebuyers is to partner with a nationwide (except New York) DPA provider like CBC Mortgage Agency and its Chenoa Fund DPA program. By working with CBC Mortgage Agency, which administers the Chenoa Fund, lenders only have one uniform set of DPA guidelines to meet, so they are easy to administer regardless of where a lender does business.
The Chenoa Fund DPA program also stands apart by offering an array of DPA that caters to a wide spectrum of low- and moderate-income buyers trying to achieve their homeownership dreams. Lenders also have the ability to set flexible pricing, plus we offer delegated underwriting for eligible correspondent lenders.
Our nationwide (except New York) reach and repository of expertise, support and borrower resources can be instrumental in not only meeting the diverse needs of today’s consumers, but they can help correspondent lenders earn credits under the Community Reinvestment Act, too.
At a time when origination costs continue to rise, leveraging the Chenoa Fund Down payment assistance program empowers lenders to consolidate and simplify their operational processes while gaining a unique competitive advantage in an otherwise challenging environment.
For more information on partnering with CBC Mortgage Agency, give us a call at 866-563-7572 or drop us a note at info@chenoafund.org.
CBC Mortgage Agency – NMLS 1186381
For licensing information, go to www.nmlsconsumeraccess.org.
Illinois Residential Mortgage License #MB.6761292. Illinois Department of Financial and Professional Regulation, Division of Banking, 555 W. Monroe St., Suite 500, Chicago, IL 60661 – 1-888-473-4858. This information is provided by CBC Mortgage Agency and intended for real estate and mortgage professionals only. It is not intended for public use or distribution. Terms and conditions of programs and guidelines are subject to change at any time without notice. This is not a commitment to lend. Equal housing opportunity.
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