How Community Mortgages Increase Access to Homeownership
Fifth Third Bank's Community Mortgage aims to make homeownership more accessible to low-income homebuyers. Learn more.
Fifth Third's Community Mortgage aims to make homeownership more accessible to more people. Low-income families often face multiple barriers to buying a home, with saving for a down payment and paying for closing costs at the top of the list. This is where the Community Mortgage can make all the difference.
The Community Mortgage decreases the amount of cash that homebuyers need for a down payment to 3% of the purchase price, while also providing eligible buyers with a credit they can put toward closing costs.
"Our goal is to get homebuyers to the closing table with less money out of their pocket and a monthly payment they can afford," says Stan Schultz, Fifth Third's Director of Mortgage Development. For realtors, Community Mortgages provide potential clients who've been on the sidelines of home buying the opportunity to find and purchase a home that meets their needs.
Who is eligible for a community mortgage?
The program is available to homebuyers whose gross annual qualifying income is at or below 80% of the area's median income. Notably, the income requirement applies just to the loan applicant and not the household.
While the program is open to first-time homebuyers, it's important to note that it's not exclusive to them. The community mortgage program does only apply to 30-year fixed-rate mortgages, which provides stability and sustainable payments to homeowners whose mortgage payments will not increase as market rates increase.
How does the community mortgage decrease the initial costs of buying a home?
The mortgage achieves this in two ways. First, the Fifth Third Community Mortgage requires only a 3% down payment. The cash for the down payment can come from multiple sources, including gifts or grants. Eligible borrowers should also investigate Fifth Third's down payment assistance program, which provides up to $7,500 to low-income buyers purchasing properties in designated low-income communities, or $5,000 to either a low-income borrower, or any borrower purchasing a home in a designated low-income community. Borrowers do not have to pay back those funds.
Additionally, the community mortgage significantly decreases the amount that homebuyers pay at closing. The program provides $1,500 in closing costs credits, which borrowers can use to cover the closing expenses or buy down points to lower their monthly payment further. The mortgage does require that borrowers contribute $500 of their own funds towards the home purchase.
How does the community mortgage make monthly payments more affordable?
For Fifth Third, making sure that borrowers benefited from affordable monthly payments was paramount in creating the community mortgage program. That meant eliminating borrower-paid mortgage insurance. Typically, lenders require that borrowers who don't put 20% down on purchasing their home purchase private mortgage insurance (PMI).
Homeownership is an invaluable tool for building financial stability and wealth. And the Fifth Third Community Mortgage ensures that the opportunity to purchase a home is available to even more people.
Are you or your clients interested in learning more about the community mortgage? Connect with a Fifth Third representative today.