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

Review Updated
Kimberly Rotter, AFC®
Author: Kimberly Rotter, AFC®
Kimberly Rotter, AFC®
Kimberly Rotter, AFC®
Accredited Financial Counselor®

Kimberly is a career writer and editor with more than 30 years' experience. She's a bankruptcy survivor, small business owner, and homeschool parent. In addition to writing for The Motley Fool, she offers content strategy to financial technology startups, owns and manages a 350-writer content agency, and offers pro-bono financial counseling.

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Ashley Maready
Fact Checked: Ashley Maready
Ashley Maready
Ashley Maready
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Ashley Maready is a former history museum professional who made the leap to digital content writing and editing in 2021. She has a BA in History and Philosophy from Hood College and an MA in Applied History from Shippensburg University. Ashley loves creating content for the public and learning new things so she can teach others, whether it's information about salt mining, canal mules, or personal finance.

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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.

Ratings Methodology
New American Funding

Best for: Diverse offerings and homeowners building credit

New American Funding

Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor

Bottom Line

New American Funding is one of the largest privately owned direct mortgage lenders in the country. The lender offers competitive rates. Its selection of loans and customizable loan terms is broader than many other lenders'. The lender also has a highly efficient lending process that allows for quicker closing times. What's more, New American can be a good solution for people building credit and wanting a good mortgage. It focuses on lending to underserved communities.

Min. Credit Score 500 FHA 620 other mortgage products

  • 500 - 620

Min. Down Payment 0% VA 3% Conventional 3.5% FHA

  • 0% - 3.5%

Key Features

  • Fast service
  • One of the top lenders to Hispanic and Black borrowers.
  • Offer customizable loans, including home addition loans
  • High customer satisfaction, A BBB rating

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Interest Only

Fixed Rate Terms

  • Customizable (8 - 40 years)

Adjustable Rate Terms

  • 10/1 and 10/6, 7/1 and 7/6, 5/1 and 5/6

Top Mortgage Lender

It's important to consider multiple mortgage lenders to find a good fit for you. We've listed one of our favorite lenders below so you can compare your options:

Lender Min. Down Payment Credit Score Next Steps
  • 0% - 3.5%
  • 580
Circle with letter I in it. 580 FHA 620 Conventional and VA 700 Jumbo
Apply Now for Better

Our mortgage rating methodology

At Motley Fool Money, mortgages are rated on a scale of one to five stars, with five stars meaning "best." We primarily focus on rates and fees, customer service, and loan versatility. This includes factors like application process, customer service channels available, and a variety of loan products.

See our full methodology here: Ratings Methodology

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.

Pros

  • Variety of loan options
  • Resources for first-time home buyers
  • Spanish-speaking

Cons

  • Application is not fully digital
  • Must submit your email to get a rate

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. New American Funding also offers a 40-year mortgage.
  • 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. This mortgage lender's Pathway to Homeownership is tailored to first-time home buyers.

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, so it will be easier to compare different mortgage lenders if you're shopping around.

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

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.

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 may 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 620. You might still qualify even if you are working toward a higher credit score. If your score is at least 500, you could apply for an FHA loan. Your loan officer can help you decide which loan product is the best fit for your situation.

New American Funding also has mortgage options for borrowers who don't have a credit score.

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.

Loan Type Down Payment Requirement
VA loan or USDA loan No down payment
Conventional loan 3% down payment, but money can come from gifts and grants, including homeowner assistance programs
FHA loan 3.5% down payment if your credit score is above 580 and 10% if your score is between 500 and 579
Data source: New American Funding

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."

FAQs

  • New American Funding's rates trend about the same as the national average. You can get a lower rate if you pay for mortgage discount points.

  • Yes. New American Funding offers competitive pricing on a wide selection of mortgages. Plus, the company has a social conscience. One thing people like about New American Funding is its commitment to serving the Latino community nationwide.

  • Yes. Unlike some other lenders, New American Funding does not charge a higher rate for rate-term refinance loans. Cash-out refinance loans may have a higher cost.

  • New American Funding looks at your credit score, your loan amount, the amount of your down payment, and how much debt you have in addition to why you want the loan. Then, it lets you know what mortgage is best for your situation. You're eligible for more options if your credit score is at least 680, but you can qualify with a lower score. You need a down payment of at least 3% unless you qualify for the zero-down VA loan or USDA loan.

  • New American Funding offers traditional conventional and government-backed loans, plus a few special mortgages that you can't find everywhere:

    • Conventional loan
    • Jumbo loan
    • FHA loan, including streamline refinances and 203(k) loans
    • VA loan, including IRRRLs and Texas Veteran Land Board loans
    • USDA loan
    • Construction one-time close loans
    • Renovation loans
    • Home equity options
    • Fixed-rate mortgage
    • Adjustable-rate mortgage
    • Buydown loan to lower the payment in the first one to three years
    • I CAN mortgage (custom terms)
    • Reverse mortgage
    • Non-QM loans, including DSCR loans, bank statement loans, asset loans, foreign national loans, and others
    • Interest-only loans