New Type of Mortgage Loan for Low-Income Home Buyers

home mortgage

The Wealth Building Home Loan is a new type of mortgage developed especially for U.S. households with low income looking to buy a home. The people who developed the loan are Bruce Marks, the founder of the Neighborhood Assistance Corporation of America (NACA), and Edward Pinto, who is a resident fellow of the American Enterprise Institute (AEI).

The new type of mortgage loan has a term of 15 years. The term is short in order to enable home owners to build equity fast. The two developers share that one of the major issues for low-income borrowers at present is the longer term of the traditional 30-year loan. It makes them more vulnerable to disturbances in the economy and to declining home prices.

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The shorter term leads to higher monthly payments. That is why the developers of the Wealth Building Home Loan decided to lower the interest rate. They plan to achieve this through the use of points, which borrowers will purchase in advance. Borrowers will have high chances of purchasing points as the mortgage will come with no down payment. It will have loan-to-value ratio of 100%.
Currently, the mortgage with the lowest LTV of 96.5% is the FHA loan. Additionally, lenders will be able to support the purchase of points via their programs for community development.

Instead of calculating the mortgage payment as a percentage of the borrower’s income, lenders will use a different measure for credit worthiness – the residual income, which is currently applied to VA loan applications. This measure will take into account the living expenses of prospect home buyers as well. Home buyers who use the loan will be required to take out private mortgage insurance. They will not be able to take out a home equity loan during the term of the mortgage.

Currently, the two developers participate in discussions with mortgage lenders for the initiation of pilot programs which to offer the Wealth Building Home Loan.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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