NACA Program: How to Buy a Home with a NACA Mortgage

By: Valencia Higuera Updated By: Ryan Tronier Reviewed By: Paul Centopani
June 28, 2024 - 21 min read

Buy your dream home with a NACA mortgage

The Neighborhood Assistance Corporation of America (NACA) offers home buyers immediate advantages with its standout NACA program.

With the NACA mortgage, you can expect no down payment, no closing costs, and flexible criteria concerning credit scores and income levels.

As a proven path to homeownership, NACA has already assisted thousands of families in securing their dream homes. Let’s dive into how it can benefit you.

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What is the NACA program?

NACA, or the Neighborhood Assistance Corporation of America, is a non-profit organization dedicated to economic justice through homeownership and community advocacy. Its mission focuses on providing affordable housing solutions and financial counseling to ensure people of all economic backgrounds can purchase their dream homes.

NACA offers a variety of housing programs for both home buyers, homeowners, and renters. Among these, the NACA Home Purchase program, which is branded as “America’s Best Mortgage,” is a specialized loan program designed to provide accessible mortgage options without the financial hurdles typical of traditional loans, such as down payments and high interest rates.

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Benefits of the NACA program

The NACA program offers a suite of benefits that make homeownership more accessible and affordable, particularly for first-time home buyers and those with low-to-moderate income.

Here’s what distinguishes the NACA mortgage from more conventional mortgage products:

  • No down payment: Borrowers are not required to provide a down payment
  • No closing costs: The mortgage eliminates many third-party fees like title insurance, application fees, and more
  • No private mortgage insurance (PMI): Unlike many traditional mortgages, there’s no need for PMI, which can add a significant cost to monthly mortgage payments
  • Below-market interest rates: NACA’s mortgage often provides an interest rate that’s more favorable than the current market average. NACA home buyers are also allowed to buy down their interest rates; in some cases, you can get nearly zero interest
  • Credit flexibility: Instead of solely relying on credit scores, NACA pays attention to a borrower’s individual financial situation, particularly their payment history over the last 12 months
  • Comprehensive counseling: Before securing the mortgage, borrowers go through an extensive housing counseling to ensure they’re prepared for homeownership

The Department of Housing and Urban Development (HUD) has granted NACA certification to operate as a nonprofit organization. Moreover, all NACA programs are part of a broader effort to support individuals in overcoming economic barriers to homeownership.

How does the NACA program work?

Instead of directly underwriting mortgages, NACA prepares its members for homeownership through comprehensive counseling and a thorough application procedure. Members are then paired with partnered banks that offer financing.

With this in mind, the NACA program stands apart from traditional mortgage pathways. Rather than prioritizing credit scores, it emphasizes the importance of a consistent payment history over the prior 12 months, such as timely rent payments. While welcoming individuals of all income brackets, the NACA program is particularly beneficial for those earning below their area’s median income (AMI).

NACA program requirements

Before making the leap, those who are interested in the NACA home buying program must fully understand its requirements and features. This is because, in order to be eligible for this unique home buying assistance program, applicants must fulfill a number of requirements.

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Credit scoreNo minimum credit score. Instead, a focus on 12-month payment history (e.g., rent).
No PMINo private mortgage insurance is required.
No income limitsOpen to all income levels. Best for those below an area's median income.
Loan limitsFollows area's conforming loan limits:Standard: $High-cost areas: $
DTI ratioMax 40–43% of gross monthly income. Mortgage payment ≤ 31% of gross monthly income.
Payment shock savingsMust save the difference between a new mortgage and current rent for 3-6 months.
Eligible property typesOwner-occupied primary residences only (including multi-family with certain requirements).
NACA membership$25/year. Volunteering for advocacy campaigns is required.

To help prospective NACA homeowners understand what’s expected of them and how they might fit within the program’s criteria, here’s a comprehensive guide to NACA program requirements.

NACA credit score requirements

With most mortgage programs, you typically need a minimum credit score of 580 to 620 to qualify.

The NACA program, on the other hand, doesn’t rely on credit scores. Instead, the program examines your payment history over the previous 12 months. NACA wants to see that you’ve consistently paid your rent and other obligations on time over the last year.

If your credit score falls short of the typical minimums, NACA’s approach could be invaluable.

NACA membership

As you begin the process of buying a home through NACA, you’ll be required to become a NACA member. The U.S. Department of Housing and Urban Development (HUD) has certified NACA as a nonprofit organization.

Membership dues are currently $25 a year, which is reasonable. But as a NACA member, you’ll also pledge to volunteer for NACA’s advocacy campaigns in your area.

NACA members enjoy several additional benefits:

  • Access to NACA’s Best in America Mortgage
  • Ability to buy down the interest rate for an even lower mortgage payment
  • Option to include home repairs and renovations in the mortgage amount
  • Ongoing post-purchase support and financial assistance if needed

NACA income requirements

The NACA program takes a unique approach to income requirements. Unlike many affordable mortgage options, NACA doesn’t impose strict income limits on potential borrowers. Instead, it uses the area median income (AMI) to categorize members and determine their home-buying options.

This membership initiative allows NACA to balance its goals of promoting affordable homeownership and fostering community development.

Priority Members

Priority members in the NACA program are those who earn less than their area’s median income. These borrowers enjoy significant flexibility in their home-buying journey, with access to a wide range of options and full program benefits.

Key aspects for priority members:

  • Can purchase homes anywhere in their area
  • Have no restrictions on location
  • Receive full access to all NACA program benefits
  • Eligible for the Best in America Mortgage
  • Benefit from comprehensive housing counseling

Non-priority members

Non-priority members are those whose incomes exceed the AMI for their area. While they can still participate in the NACA program, they face certain restrictions designed to align with NACA’s community development goals. This requirement ensures that higher-income buyers contribute to the development and revitalization of neighborhoods that need investment.

Key aspects for non-priority members:

  • Limited to buying homes in designated “priority areas”
  • Priority areas are typically low-to-moderate income communities
  • Still benefit from NACA’s favorable terms
  • Eligible for no down payment options
  • Receive below market interest rates
  • Must adhere to location restrictions to participate

Regardless of priority status, all members must meet other NACA program requirements, such as debt-to-income ratios and payment shock savings.

NACA loan limits

NACA loans cannot exceed the conforming loan limit for an area. In 2024, the limit for a single-family home is $ in most areas and $ in high-cost areas.

This means that the purchase price of the home you’re considering should align with these limits to qualify for a NACA loan.

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Debt-to-income ratio

As a general rule of thumb, your total monthly debt payments, including your future mortgage payments, shouldn’t exceed 40% to 43% of your gross monthly income. This is known as your debt-to-income ratio, or DTI.

Also, NACA limits borrowers’ mortgage payments to 31% of their gross monthly income.

For instance, if your pre-tax monthly income is $4,000, your monthly mortgage payment would have to be $1,240 or less to be eligible for the NACA program.

Payment shock savings

If your new mortgage payment exceeds your current rent, you’re required to maintain “payment shock” savings to compensate for the payment difference.

Let’s say you pay $1,000 per month for rent, but your new mortgage payment will be $1,300 per month. NACA will require that you save an extra $300 every month (for a minimum of 3 to 6 months) before you’re qualified. You must keep this money in savings throughout the closing.

Eligible property types

You can only use the NACA home purchase program to buy an owner-occupied primary residence. This includes single-family homes and units in condos, co-ops, and other mixed-use buildings.

You can’t use any NACA programs to buy a second home or an investment property. Nor can you use NACA if you own other properties.

The only exception is if you’re buying a multi-family home. You can live in one of the units and rent out the others. Before qualifying, though, NACA requires the completion of a “recognized” landlord training course. Also, you must maintain at least two months of mortgage payments in reserves.

Types of NACA housing programs

Obstacles to homeownership like high down payments, strict credit requirements, and a lack of financial literacy frequently discourage first-time home buyers. NACA directly addresses these challenges and provides a lifeline to those who are underserved by traditional mortgage lenders.

NACA housing programs feature benefits such as no down payments, flexible credit score minimums, comprehensive housing counseling, and the potential for financial assistance with closing costs, making homeownership accessible and affordable for many. Here’s what you should know about NACA programs.

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NACA Home Purchase program

Branded as “America’s Best Mortgage,” this NACA Home Purchase program is designed to remove the financial barriers that often prevent individuals from buying a home. Among several offerings that NACA calls its economic justice loans, this mortgage program is designed to make homeownership more affordable.

  • No down payment required: Buyers do not need to save for a large down payment.
  • No closing costs: This reduces the upfront expenses typically paid at closing.
  • No fees: Eliminates additional costs associated with loan processing.
  • No mortgage insurance: Reduces monthly payments by removing the need for private mortgage insurance.
  • Low interest rates: Provides affordable monthly mortgage payments over the life of the loan.

HOT-PHA (Section 8/Housing Choice Voucher)

The HOT-PHA allows Section 8 or Housing Choice Voucher recipients to become homeowners by combining their vouchers with NACA program benefits.

  • Combines Housing Choice Vouchers with a NACA mortgage
  • Potential for mortgage-free homeownership in 20 years or less
  • No additional cost to housing authorities

City One-Dollar Homeownership Program

This NACA program, in partnership with local housing authorities, provides residents with an opportunity to buy vacant properties for just one dollar, along with financing for any necessary renovations or new construction.

  • Homes or lots are available for $1
  • Financing for repairs, renovations, or new construction
  • Focus on neighborhood revitalization and community engagement

NACA’s New Construction Homes

NACA provides affordable, high-quality modular homes that are designed to exceed standard building codes and offer a cost-effective solution for families looking to own a home.

  • Affordable modular homes with high-quality standards
  • Prices are often below market rates
  • Built to resist severe weather conditions and blend in with the surrounding communities

Homebuyer Purchase & Renovation Program

This NACA housing program allows home buyers to finance both a home purchase and any necessary renovations, all with one mortgage. This loan includes features like a rehab escrow and support through NACA’s HAND department for a seamless renovation process.

  • A single NACA loan to finance both the purchase and renovation
  • No mortgage payments required during the first six months of renovation
  • Financial assistance and support through the renovation process

Refinance & Renovation

Through this program, NACA homeowners have a refinancing option to fund critical home repairs and renovations. Eligible home improvements must improve living conditions while preserving the home’s value.

  • Refinancing options for repairs and renovations
  • Focus on addressing significant issues like safety and structural integrity

Home-Save Program

The Home-Save Program is intended to prevent foreclosure and assist distressed homeowners with unaffordable mortgages, with a focus on permanent, affordable loan term adjustments.

  • Assistance for NACA homeowners with unaffordable mortgage payments
  • Advocacy for permanent loan modifications

Housing Counseling

NACA provides extensive housing counseling to both prospective home buyers and current homeowners. This NACA program is a cornerstone of the organization’s efforts to ensure individuals are well-prepared for the responsibilities of homeownership and to assist homeowners in maintaining their investments affordably.

  • Comprehensive housing and financial counseling for all NACA members
  • Advocacy for affordable mortgage solutions
  • Support and financial assistance for homeowners in distress

Rental Housing Program

This NACA program offers housing counseling and advocacy to support renters through education and access to resources.

  • Counseling for renters on housing stability and rights
  • Connections to rental assistance and affordable housing resources
  • Advocacy against predatory landlord practices

How to get a NACA mortgage

Buying a home with no down payment or closing costs probably sounds like a pretty good deal. It might even sound too good to be true.

The catch? You can’t walk into a bank or contact an online lender and ask for a NACA loan. Instead, you’d need to complete the entire NACA process, join the advocacy group, and work with an in-house counselor who analyzes your personal finances.

Check your home buying options. Start here

If you need NACA’s help to achieve the American Dream of homeownership, these extra steps will be worthwhile. But if you can qualify for an affordable mortgage on your own, you won’t need this extra support.

Not sure whether you’ll benefit from NACA programs? Learning how the loan application process works can help you decide.

1. Attend a homeownership workshop

This is the first step to getting a NACA mortgage. The workshop not only provides information about homeownership but also explains how the NACA program works in detail. Workshops are held multiple times throughout the month in different cities.

To find a workshop near you, visit If you can’t drive to a NACA office, you can attend a virtual homeownership workshop.

2. Meet with a housing counselor

You’re also required to meet with a housing counselor. Your counselor reviews your income and current debts to gauge your financial readiness to purchase a home. They’ll determine how much you can spend on a house.

If you’re not financially ready, your counselor will provide instructions on becoming NACA-qualified and then help monitor your progress.

3. Attend a purchase workshop

Once you’re NACA-qualified, you’ll attend a home purchase workshop to learn more about the home buying process. You’re also assigned an in-house real estate agent who you’ll work with to find a home within your budget.

A NACA qualification is only valid for six months. If you don’t buy a house within this timeframe, you’ll have to re-qualify.

4. Request a qualification letter

Once you’ve found a house, contact your housing counselor to request a qualification letter. This letter proves that you’re qualified to buy the home. You’ll include it with your purchase offer.

5. Wait for the home inspection

Homes financed with a NACA mortgage must be in good condition. A NACA-approved home inspector and pest control company will visit the property. Issues with the property must be fixed before closing.

6. Meet with your mortgage consultant

Next, you’ll meet with a NACA-approved mortgage lender to complete the home loan application process. NACA doesn’t create loans. Instead, a private lender (typically Bank of America) issues funds.

Your in-house mortgage consultant will confirm that you’re still NACA-qualified. In addition, they’ll check to ensure that your income, employment, debt load, and credit history remain positive.

The lender begins processing your loan and then schedules a closing date.

7. Receive post-purchase assistance

You can also take advantage of NACA’s Membership Assistance Program (MAP). This post-purchase assistance includes additional homeownership, budgeting guidance, and hardship relief.

NACA program support services

The NACA program offers comprehensive support services to help first-time home buyers navigate the complexities of purchasing a home. These services are designed to ensure that NACA members are well-prepared for homeownership and can maintain their homes long-term.

Pre-purchase housing counseling

NACA’s housing counseling is a cornerstone of their support services. Each home buyer works with a dedicated NACA counselor, who provides:

  • Comprehensive counseling on the home buying process
  • Guidance on improving credit and managing debt
  • Assistance in determining an affordable mortgage payment
  • Help with budgeting and saving for homeownership

Preparing borrowers for the responsibilities of owning a home is essential, and that’s why individualized housing counseling is so important.

Financial management assistance

The NACA home program offers ongoing financial assistance to help members achieve and maintain financial stability.

  • Budgeting workshops to help manage household expenses
  • Debt reduction strategies
  • Savings plans for future homeownership costs
  • Guidance on improving credit scores

These services aim to ensure that NACA homeowners are financially prepared for the long-term commitment of a mortgage.

Post-purchase support and education

NACA’s support doesn’t end at the closing table. The organization provides ongoing assistance to NACA homeowners.

  • Post-purchase workshops on home maintenance and repairs
  • Foreclosure prevention assistance through the Home Save Program
  • Access to NACA’s Membership Assistance Program for temporary financial hardships
  • Continued financial management education

This ongoing support helps ensure the long-term success of NACA homeowners and contributes to stable communities.

NACA program: Pros and cons

When considering the NACA mortgage, it’s essential to weigh its unique advantages against its potential limitations.

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To help you determine if the NACA program aligns with your home ownership goals, here’s a breakdown of its advantages and potential drawbacks.

NACA mortgage pros

  • The program offers competitively low interest rates to its members.
  • Buyers using the NACA program are not required to make a down payment.
  • One of the unique features of a NACA loan is that it doesn’t necessitate a minimum credit score for eligibility.
  • Participants benefit from the absence of lender fees, reducing the overall cost of securing a mortgage.
  • Additionally, there are no third-party closing costs, such as appraisal, title insurance, or attorney fees, further minimizing the financial burden on homebuyers.

NACA mortgage cons

  • Homes can only be purchased within a NACA coverage area.
  • Interest rates may be higher if your income exceeds the area median income.
  • The application process is extensive and includes mandatory attendance at NACA workshops and sessions with a counselor.
  • The NACA program has set a cap on the maximum home price, which is significantly lower than the conforming loan limits in most regions.
  • A continued commitment to participate in at least five NACA events annually is required.

Alternatives to the NACA program

Not everyone needs the NACA Best in America Mortgage. Even borrowers who face credit or down payment challenges can find other solutions.

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Below are a few alternatives to take into consideration if you’re a home buyer interested in the NACA program but want to make sure that it’s right for you.

Down payment assistance

Down payment assistance programs provide grants and low-interest second mortgages to help cover a borrower’s down payment. They can sometimes pay for closing costs as well. These programs tend to be local; ask your Realtor about programs near you.

You won’t have to repay a down payment grant. And with a low-interest loan, the company might postpone repayment until you sell or refinance the home.

First-time home buyer programs

Similarly, many programs make the dream of homeownership financially easier for first-time homebuyers. Along with down payment and closing cost assistance programs, several mortgage programs allow low down payments.

For example, some conventional loans require as little as 3% down, even if your credit score is 580. You might even be eligible for a VA or USDA loan, which requires no down payment.

Verify your low-down-payment mortgage eligibility

National Home Buyer Fund

This non-profit organization provides grants up to 5% of the loan amount and 0% interest on forgivable loans (forgiven after three years). These can be used to help cover your down payment requirement.

The National Home Buyer Fund is available in all 50 states, and you do not have to be a first-time home buyer to qualify.

Chenoa Fund

The Chenoa Fund provides down payment assistance to first-time homebuyers with low-to-moderate incomes. You can use the fund with both conventional and FHA loans. This program provides different solutions, such as a 10-year down payment loan and a down payment second mortgage forgivable after 36 months.

NACA program FAQ

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Who qualifies for the NACA program?

To qualify for the NACA program, you must either earn a low or moderate income for your area or purchase a home in a targeted “priority area.” In addition, you must buy a home to use as your primary residence; you can’t own any other properties; and you must have sufficient income and/or cash reserves to cover your future mortgage payments. Finally, you must participate in NACA’s homeowner education courses and work with a NACA counselor and an approved mortgage lender.

What is the income limit for NACA? 

The NACA mortgage program doesn’t have income limits. However, your income determines where you can buy a property. If your income is below the median income for the area, you can purchase a home anywhere in the area. If your income is higher than the median income, you can only purchase in “priority areas.” These are low-to-moderate-income housing communities.

What credit score is needed for NACA? 

The NACA program doesn’t have minimum credit score requirements, so you may qualify with bad credit. However, the program does review your payment history. To qualify, you must make on-time debt payments (including rent) for at least 12 consecutive months prior to qualifying.

How long does it take to buy a house with NACA? 

Once you have a signed purchase agreement, NACA says its mortgage process takes 28 days from “contract to close.” However, the full home-buying process from start to finish takes longer. Sometimes it can take a borrower about three months to get NACA-qualified. Once you have it, NACA approval is valid for six months. If you don’t buy a home within this timeframe, you must re-qualify.

Do you have to be a first-time homebuyer with NACA? 

You don’t have to be a first-time homebuyer to use the NACA purchase program. Keep in mind, though, that you cannot own any other properties at the time of closing. Also, anyone living in a property purchased with a NACA mortgage can’t have ownership interest in another property.

What banks does NACA work with? 

The NACA organization doesn’t issue loans. Rather, it works with private mortgage lenders to provide funding for borrowers. Currently, Bank of America is NACA’s largest partner and the only financial institution it uses to create loans. In the past, NACA has had partnerships with Fleet Bank and CitiMortgage.

Can you sell a home you bought with NACA? 

Yes, you can sell a home purchased with a NACA mortgage. The process is similar to selling any other home. Keep in mind that you can receive real estate services through the post-purchase member assistance program (MAP). If you’ve lived in a NACA home for at least three years, you’re eligible to purchase another home through the program.

Is there a catch with the NACA program? 

The NACA program might seem too good to be true, but it’s helped hundreds of thousands of families find affordable homes—with no down payment, closing costs, credit score hurdles, or PMI. However, you must meet specific program requirements. These include completing a free homeownership workshop, working with a housing counselor, meeting financial requirements, and attending a homebuyer workshop. You must also join NACA and advocate for its cause of making homeownership more affordable.

What are NACA mortgage rates? 

Borrowers who apply for a NACA mortgage receive a rate that’s below current market rates, thus increasing affordability. Interest rates vary according to market trends but include both 30-year and 15-year fixed rates.

How much will NACA approve me for?

With any mortgage, your loan size depends on your personal finances. Lenders won’t approve a loan you can’t afford. That said, lenders also cap loan sizes, even if you could afford a bigger loan. For NACA-brokered loans, those loan limits match those for other conventional loans. In 2024, that’s $726,200 in most areas.

Does everyone get approved with NACA?

The NACA program doesn’t check credit scores. Still, not everyone gets approved for a NACA loan. Housing counselors check a borrower’s rent and debt payments for the past 12 months. Someone who’s missed several payments recently may not qualify yet. However, your counselor will coach you toward achieving eligibility.

What if I don't qualify for the NACA program?

The NACA program can seriously lower the barrier to buying a home. But not all borrowers will qualify.

Luckily, there are plenty of alternatives to the NACA program that can help reduce the upfront cost of buying a house and put affordable homeownership within reach. From low- and no-down-payment mortgages to down payment assistance, many buyers can get into a new home with very little out of pocket.

Not sure whether you qualify? You can check your home buying eligibility with a lender starting right here.

Time to make a move? Let us find the right mortgage for you

Valencia Higuera
Authored By: Valencia Higuera
The Mortgage Reports contributor
Valencia Higuera is a freelance writer from Chesapeake, Virginia. As a personal finance and health junkie, she enjoys all things related to budgeting, saving money, fitness, and healthy living.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.