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Posted 03/31/2016

Specific U.S. Census Tracts Give Access To Below-Market Mortgage Rates

Where you live can affect your mortgage rates and access to assistance programs

Majority Of Buyers Will Qualify For An Assistance Program

The U.S. government has expanded its access to mortgage- and downpayment-assistance loan programs and huge swaths of the country are now eligible.

If you're buying a home or planning a home loan refinance, you may be eligible for special mortgage programs offering low-downpayment options with reduced mortgage rates, plus discounted rates on private mortgage insurance (PMI).

The programs, which are designed to give equal credit access to consumers, target underserved neighborhoods, lower-income households, and minority populations.

To use these programs, though you don't have to be lower-income household or a member of a minority to qualify -- you only have to live in specific, pre-approved neighborhoods.

Eligible homeowners can get access to a wide range of mortgage assistance tools including downpayment assistance programs (DAPs), closing costs assistance programs, loans with low downpayment requirements, and tax credits for housing.

The key is that your home is located in designated, pre-approved census tract. There are literally tens of thousands of such census tracts nationwide.

Click to see today's rates (Dec 4th, 2016)

What Is A Census Tract?

A census tract is a block of land, mapped out and used by the Bureau of Census to analyze populations -- somewhat like a neighborhood.

Census tracts are irregularly-configured and mostly permanent. On a map, they look like oddly-shaped polygons and, over time, their borders can shift slightly.

Each census tract encompasses a population of between 2,500 and 7,500 people. Census tracts do not follow city borders, specifically.

It's not unusual to see a census tract covering parts of two separate counties.

Within each census tract, populations are counted and described. For example, data is available for each of the following statistics within a given census tract:

  • Tract population, and percentage of population which is "minority"
  • Tract median income, and number of households below poverty line
  • Number of housing units, including number of units which are rentals

In all, there are close to two dozen data points for each U.S. census tract which describe the make-up of the area. Dependent on those traits, homeowners may be eligible for special mortgage financing.

Click to see today's rates (Dec 4th, 2016)

Census Tracts Grant Access To Special Mortgage Loans

The United States government has long believed that homeownership is good for households and good for communities.

It's the tenet which birthed the FHA mortgage in 1934; and, the belief that led to the creation of the VA mortgage as part of the G.I. Bill of 1944.

Today, the government continues to support households and communities whenever possible and one way it works to promote homeownership is via programs which lower the hurdles for owning a home.

There are a number of government-assistance programs on the federal and state level which support low-income and underserved census tracts; and census tracts with high minority populations.

Regardless of whether you're considered a low-income household or a member of a minority, by simply buying in such a census tract, you'll find yourself eligible for all sorts of mortgage-related help.

Here are a few census tract "types" in which you can get aid.

Low-Income Census Tracts

The government tracks the income of all households within a census tract.

Areas considered "low-income" often get access to downpayment assistance grants, and access to special loan programs. One such program is the conventional HomeReady™ mortgage.

Via HomeReady™, buyers can make a downpayment of just 3% on a home and get access to discounted private mortgage insurance payments.

If you're buying a home in a low-income census tract, you are instantly HomeReady™-eligible -- even if your household income can be considered "high".

For a census tract to be considered "low income," the tract must have a poverty rate of at least 20 percent; or, the tract's median family income must be 80 percent or less as compared to the median family income for the area.

49% of all census tracts meet the low-income requirement.

Click to see today's rates (Dec 4th, 2016)

High-Minority Census Tracts

The government also tracks the ethnicity of household members within a census tract.

Like low-income census tract homeowners, homeowners in areas considered "high-minority" can use downpayment assistance grants and special loan programs not available to the general population.

For a census tract to be considered "high-minority," the tract must have a minority population of at least 30 percent of the total population; and, the tract's median household income must be no higher than the median household income for the area.

Remember: you don't have to be a member of a minority population in order to use the high-minority census tracts benefits. If you live in a qualified high-minority census tract, and your household income is less than the median household income for the area, you're eligible for government assistance.

This includes the aforementioned HomeReady™ program, among others.

Disaster-Impacted Census Tracts

For homeowners in areas impacted by natural disaster, temporarily, the government offers mortgage assistance.

In order to be qualified as a disaster-impacted census tract, the area must have been categorized by the Federal Emergency Management Agency (FEMA) as a federal disaster area; and your household income may not exceed the area's median household income to be eligible.

Census tracts are designated as "disasters" fairly regularly.

During winter months, major snowstorms can earn an area the "federal disaster" designation; and, during summer months, wildfires and storms can do it.

Such designations are only temporary, though, so if you plan to use the disaster census tract designation to get access to mortgage assistance, it's important to act on it quickly.

Click to see today's rates (Dec 4th, 2016)

What Are Today's Mortgage Rates?

Buying homes in low-income, high-minority, and disaster-impacted census tracts can make it easier and cheaper to purchase a home.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Dec 4th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)