WHEDA (Wisconsin Housing and Economic Development Authority), offers special 30-year fixed loans to low and moderate-income home buyers looking to purchase an owner-occupied home in Wisconsin. The programs offered by WHEDA are commonly referred to as “WHEDA Loans.”
WHEDA loans are special because you may qualify for putting 0% down, and you’ll enjoy either reduced-cost private mortgage insurance or NO mortgage insurance. The 30-year fixed WHEDA loan typically equals 97% of the home’s purchase price, but if you qualify, the remaining 3% down payment can be financed with a special 10-year fixed-rate Easy-Close Second Mortgage. You need to meet WHEDA’s eligibility requirements.
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Four types of WHEDA Loans
1. WHEDA First-time Home Buyer Advantage with PMI
This program is only available to home buyers who have not owned real estate in the past three years. So you can regain your first-time buyer status if it’s been more than three years since you sold a home. You also have to meet WHEDA’s lower income limits in addition to the normal eligibility requirements. However, if you meet these requirements, you’ll have access to WHEDA’s lowest available rate. Private Mortgage Insurance (PMI) is typically required when a home buyer makes less than a 20% down payment. The mortgage insurance company promises to reimburse the mortgage lender in the unlikely event of foreclosure to make up for the additional down payment you would have otherwise been required to make to avoid PMI.
2. WHEDA First-time Home Buyer Advantage with NO PMI
PMI monthly premiums are more expensive for home buyers who have lower credit scores, so WHEDA offers a variation on the 30-year fixed-rate First Time Home Buyer program where the rate is 0.5% higher in lieu of you paying PMI. Don’t worry, we’ll crunch the numbers for you to see which one is the better option in your specific situation.
3. “Regular” WHEDA Advantage with PMI
The “Regular” WHEDA Advantage loan can be used by first-time buyers if their household income is too high for the special first-time Home Buyer program, and it can also be used by anyone who has owned a property in the past three years as long as you don’t own two residential properties at the same time and qualify for a WHEDA loan. It’s perfectly okay with WHEDA to sell your current home in the morning and close on a new home using a WHEDA loan in the afternoon. WHEDA income limits for repeat home buyers are higher than the income limits for first-time buyers.
4. “Regular” WHEDA Advantage with NO PMI
Your Accunet Loan Consultant will compare your WHEDA loan options and see which one results in a lower monthly payment. In lieu of paying mortgage insurance, the interest rate for the NO PMI option is 0.75% higher than the “Regular” WHEDA Advantage rate with PMI.
So why choose a WHEDA loan?
- WHEDA Loans are amortized over 30 years for the lowest monthly payment
- WHEDA’s rates can often times be lower than conventional loan programs
- Down payment Options as low as 0% down without mortgage insurance
- If monthly PMI is required, WHEDA loans require less costly monthly PMI than a regular 30-year fixed-rate loan.
Essentially, the WHEDA Advantage has the potential to offer lower monthly payments and/or lower down payments compared to other conventional loan programs.
Is a WHEDA loan right for me?
A WHEDA loan may be right for you if you meet WHEDA’s eligibility requirements. Every home buyer situation is unique, and it’s often beneficial to explore all financing options before making a final decision. At Accunet Mortgage, our team of licensed loan consultants will provide you with detailed side by side comparisons of all your financing options. That way you can make an informed decision on whether or not a WHEDA loan makes sense for your situation. We’ll also take the time to ensure you’re accurately pre-approved and that any surprises are discovered and addressed up front.