New American Funding Mortgage Review: Harder-to-Find Loans and Low Prices

New American Funding could be a great first stop for borrowers who think they might not qualify for a home loan, or who feel intimidated by the mortgage process -- founders Rick and Patty Arvielo prioritize inclusion. This lender offers home loans to meet most borrowers' needs, but with a particular focus on helping underserved and minority borrowers achieve homeownership. One potential downside: There's one state where New American Funding doesn't make loans yet.

Check out our New American Funding review to find out if this might be the best mortgage lender for you.

Full New American Funding review

This mortgage lender is a good fit for: Borrowers who need a low down payment mortgage. New American Funding is also a great option for borrowers who prefer to conduct business in Spanish.

Top perks

Variety of loan products

In addition to the standard home loan offerings you'd expect, New American Funding also offers several other types of mortgage loans. These include:

• Non-qualified mortgages: Non-QM loans come in many different shapes and sizes. One non-QM option, the stated income loan, is a mortgage product for self-employed borrowers and others who want to qualify based on income verification documents other than tax returns.
• Reverse mortgage: This is suitable for older homeowners who want to access their equity in the form of monthly income. In a reverse mortgage, the lender makes payments to the borrower.
• Customizable loan term: Borrowers can choose custom loan terms between eight and 30 years.
• All government-backed loan programs: New American Funding offers the VA loan, FHA loan, and USDA loan.
• Buydown loan: With this loan, you pay mortgage discount points, but instead of getting a very small permanent reduction in your mortgage rate, you get a large temporary discount.

First-time home buyer resources

New American Funding helps connect first-time home buyers with resources that can help make owning a home a reality. If you want to get a home loan with little or no money down, New American Funding can point you to down payment assistance and grant programs that might be available in your area.

Transparent website

It's easy to find answers to many initial questions on the New American Funding website. Buttons lead to helpful information about FHA loans, VA loans, cash-out refinances, and a mortgage calculator. Current mortgage rates are prominently displayed.

Inclusion initiatives like bilingual customer service

New American Funding provides services in both Spanish and English. New American Funding is Hispanic-owned and places a special emphasis on serving the Latino and Hispanic community. At New American Funding, 19% of employees are Hispanic. The lender is also funding $2 billion in new loans to the Latino community. Many of its customers and employees appreciate the company's focus on diversity and inclusion.

Among its customers, New American Funding has a good reputation. This lender has earned 4.91 out of 5 stars on Zillow, and an A rating with the BBB.

HELOC

If you want to borrow against your home equity, you could consider a home equity line of credit here (as an alternative to a cash-out refinance mortgage). That could be an advantage if you have a mortgage with a low rate that you don't want to replace.

What could be improved

No home equity loan or HELOC

New American Funding does not currently offer a home equity loan If you want to tap the equity in your home, you need to take a cash-out refinance, HELOC, or specialty loan. HELOCs typically have a variable interest rate, so this is a disadvantage for someone who wants a fixed-rate loan.

No fully digital application

New American Funding has an online portal where you can start and manage the application process and upload your documents, but underwriting is done by actual humans. Manual underwriting is good for borrowers who need special consideration. But other borrowers tend to prefer a fully digital experience, with more automation and less human interaction.

How to qualify

The three main parts of your mortgage loan application are your credit score, down payment, and debt-to-income ratio.

Credit score

Conventional loans at New American Funding require a FICO® Score of at least 680. You might still qualify even if you are working toward a higher credit score. If your score is at least 580 , you could apply for an FHA loan. Your loan officer can help you decide which loan product is the best fit for your situation.

Down payment

New American Funding offers many choices for borrowers looking for a low down payment mortgage. VA loan and USDA loan borrowers don't need to have a down payment. Conventional loan borrowers will need a 3% down payment, but it can come from gifts or grants. FHA borrowers need 3.5% down. Some loans may require bigger down payments.

Keep in mind that low down payment loans typically come with higher costs. Advertised mortgage rates are typically reserved for borrowers who have excellent credit and a 20% down payment.

Besides the down payment, you may also need cash for closing costs. If you are low on cash, you can talk to the lender about taking a higher mortgage rate in exchange for a lender credit to cover your out-of-pocket costs. This is sometimes called lender-paid points or negative points.

Debt-to-income ratio

The debt-to-income (DTI) ratio is a figure all mortgage lenders look at. It is the sum of your required monthly debt payments (including the housing payment on the home you want to buy) divided by your before-tax income. Only the required minimum monthly payments that appear on your credit report are used in the calculation. The lower your DTI, the higher the monthly payment you can qualify for.

At New American Funding, your DTI should be under 43% for a conventional loan. Some loans may allow a higher DTI.

How are New American Funding's refinance rates?

The current mortgage loan rates at New American Funding trend about the same as the national average. Every major loan type is offered as a purchase or rate-term refinance loan, and the mortgage refinance rates are the same.

How are New American Funding's rates compared to the national average?

New American Funding's mortgage rates trend about the same as the national average. They may look lower on its website but you'll pay fees to get the lowest rates. When we checked, New American Funding's advertised rates assumed that the borrower would pay at least 3.0 mortgage discount points. That means a fee equal to 3% of the loan amount. In other words, if you borrow $300,000, you pay an additional $9,000 to get New American Funding's lowest interest rate. That will either be an out-of-pocket cost or will increase the amount of your loan. You can always save the upfront cost and instead pay a higher rate for the life of the loan.

New American Funding is right for you if:

• You're a first-time home buyer. The lender's resources are helpful for prospective homeowners taking their next big leap.
• Your credit score could use some improvement. New American Funding offers an array of loan products that are suited to lower credit scores.
• You're self-employed. Check out New American Funding's non-QM mortgage options when you shop around. Loan officers here are familiar with the qualification process if you don't have any W-2 income.
• You're in an underserved community or demographic. New American Funding's goal is to take mortgage education into underserved communities and "help all perspectives be represented as homeowners."