Lease-to-own renters to get mortgage financing from New Penn
New Penn Financial has entered into a pilot program to provide mortgage financing to participants in Home Partners of America's Lease Purchase program.
It is the first time that Home Partners is working with a mortgage lender to finance its lessors' property purchase. Previously the resident was responsible for finding their own financing.
To participate in the "Ownership Conversion Pilot," residents must be first-time home buyers that meet Fannie Mae's eligibility requirements, along with making 24 consecutive months of on-time rent payments and complete homeownership education or counseling. Fannie Mae will purchase eligible loans.
The pilot program will be available until late 2019, because this is "a test and learn opportunity," the companies said in a press release.
Through the Lease Purchase program, approved applicants work with a real estate agent to select a home that meets Home Partners' criteria. Home Partners purchases the property and leases it to the applicant at a predetermined rent. Rent payments are not applied to the purchase price.
Eligible property types are a single-family home or townhome, to be purchased via a traditional sale in an approved community and that was listed for between $100,000 and $450,000.
The applicant has the right to purchase the property at a preset price in a three to five year period. They can qualify for a mortgage by using their security deposit for the down payment or towards the closing costs.
Existing Home Partners residents who meet the on-time payment and education requirements are eligible for this financing, as will be those who start the Lease Purchase program during the pilot period.
"Our goal is to provide our clients a transparent and flexible path to homeownership," said Home Partners CEO Bill Young in the press release. "The Ownership Conversion Pilot provides potential first-time home buyers with the flexibility to prepare for homeownership while renting a home and the potential to reduce their down payment requirements."