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You CAN Afford to Buy a Home WHEDA: Makes Mortgages Easier for First-Time Home Buyers
BY: Debbie Hodge
With inventory low and home prices higher than a few years ago, many would-be first-time buyers feel like the threshold is too high to make the leap into home ownership.
However, thanks to a specialized first-time home buyer mortgage program through WHEDA, owning your own home could be within reach.
Is This a New Program?
Lake Ridge Bank has always offered mortgage loans through the Wisconsin Housing and Economic Development Authority (WHEDA), but recently we became a Correspondent Lender.
In the past, Lake Ridge Bank provided WHEDA loans as one of our mortgage offerings, but as a Mini- Correspondent Lender, the underwriting was done by WHEDA. Now, as a Correspondent Lender, Lake Ridge Bank can underwrite WHEDA loans. By underwriting these ourselves, we can provide our clients with a quicker turnaround time with a decision, typically 24-48 hours, compared to about a week’s turnaround when WHEDA underwrites them.
What Makes this Program More Affordable?
Most fixed rate mortgage loans are guaranteed by Fannie Mae or Freddie Mac, which were created by Congress to provide stability and consistency across the market. However, other organizations will sometimes create mortgage loan programs to fill in the gaps for a specific type of homebuyer. For example, WHEDA’s mission is to “help Wisconsin thrive by expanding access to affordable housing choices.” Since the early 1970s, they have financed the building of affordable housing options and created loan programs to lower the threshold for home buyers to become home owners.
Some of the barriers that a WHEDA mortgage helps alleviate for those who qualify include:
- Down Payment. There is a common misconception that a buyer needs 20% down to purchase a home. In reality, a Buyer can put as little as 3% down with programs offered through Freddie, Fannie, or WHEDA. In addition, WHEDA offers downpayment assistance programs such as WHEDA Easy Close, which is a second mortgage that is provided by WHEDA that helps with downpayment and Closing Costs.
- Interest Rate. When comparing apples to apples on a 30-year fixed rate, the First Time Home Buyer WHEDA loan usually provides a lower interest rate than a typical Fannie Mae or Freddie Mac loan.
What are the Criteria?
The final numbers will depend on a variety of factors, including the type of property, the size of the loan amount, and how large your down payment will be. There are also some criteria that a home buyer must meet to qualify for a WHEDA loan. Some of those criteria include:
- Buyer and property must be located in Wisconsin
- The property must be owner-occupied
- The purchaser’s household income must meet certain income limits
- There are purchase price limits which vary depending on how many units (1-4) the property contains.
- Buyer must complete a Home Buyer Education course online
Don’t let these criteria scare you away. The income limits, for example, are based on the county you live in and often exceed customer expectations. The education component is also easy to fulfill with online options that can be completed in one sitting.
How Does it Work?
The process for applying for a First-time Home Buyer mortgage loan from WHEDA will not feel any different than a more typical mortgage. We ask for the same type of information and do not require any additional documentation or data.
You also don’t need to ask about a WHEDA loan yourself. Our job is to ask all the relevant questions to help us research the best mortgage options for each new home buyer and offer the most appropriate options for your specific situation.
In the end, we want to shatter the misconception that you can’t afford a home and give first-time home buyers every opportunity to reach their goals.
WHEDA is exclusive to Wisconsin and can put those goals within reach. Make sure to work with a lender like Lake Ridge Bank who has the connections to offer a full range of loan products and has a stable of experienced lenders with the industry knowledge to find those unique opportunities along the way.
For more information about ways we can help you buy a home, visit lakeridge.bank/mortgage or call (608) 223-3000 to get connected with a mortgage lender near you.