Potential first-time homebuyers continue to look for ways to achieve affordable homeownership, particularly as house prices continue to rise. This demonstrates the importance for lenders to partner with industry organizations that support homebuyer education and affordable mortgage programs. Housing finance agencies (HFAs) can be a powerful resource for lenders serving very low-, low- and moderate-income aspiring homebuyers, including first-time homebuyers.

Freddie Mac recently added new enhancements to its HFA Advantage® mortgage product, providing a competitive solution for mortgage professionals to consider for first-time homebuyers. In this article, Freddie Mac will share more on the role of HFAs in the mortgage process and the new enhancements of the Freddie Mac HFA Advantage mortgage.

Working with HFAs

State and local HFAs have been around for decades and are mission-driven public entities focused on helping borrowers overcome the entry costs of homeownership. Although HFAs generally do not originate loans themselves, they offer first-mortgage loan products as well as down payment assistance (DPA) programs through their participating lender network.

The Freddie Mac HFA Advantage mortgage was created specifically for HFAs (and available exclusively to them) and provides cost-saving options and effective DPA programs for their borrowers. Loan-level credit fees in price (i.e., delivery fees) are waived for HFA borrowers. To assist borrowers in qualifying, the product also includes eligibility for charter level mortgage insurance (the lowest allowable type of mortgage insurance).

New enhancments to HFA Advantage have made it more appealing for qualified first-time homebuyers and repeat borrowers. These include:

  • The addition of manufactured housing and two- to four-unit properties, providing HFA borrowers with the ability to find a property that matches their housing needs.
  • The inclusion of non-occupant co-borrowers.
  • Expanded credit risk assessments within Loan Product Advisor® (LPA) to allow more very low-, low- and moderate-income borrowers to qualify for mortgages.
  • The ability to offer the HFA Advantage mortgage—or rerun existing loans—to more borrowers due to recently updated AMI values issued by the Federal Housing Finance Agency (FHFA).

If you’ve recently received an LPA Caution on any HFA Advantage loan submissions you’re encouraged to review your entire pipeline and resubmit loans to LPA or Loan Selling Advisor®, including those that previously received an LPA Caution or LQA Yellow, to allow your borrowers to take advantage of our expanded credit box.

Partnering Across the Industry to Make Home Possible

The ability to couple low-down payment first mortgages with DPA programs can help borrowers address cost concerns as rising home prices continue to challenge many current and future borrowers. HFAs are a consistent source of support for first-time homebuyers and have a mission to provide equity in housing across all borrower types. As a housing professional, partnering with HFAs in your local area can be key to providing the best mortgage options to borrowers.

Click here to learn more about the HFA Advantage mortgage. If you’re an HFA participating lender or real estate professional partner and want to learn more about working with HFAs in your state, contact your regional affordable lending manager.

Also, developed exclusively for HFAs, subscribe to our HFA Resource Center to receive information on featured tools, training resources, and a schedule of outreach events in your community to help your clients meet their homebuying needs. You'll find the subscription link at the bottom of the HFA Resource Center page.