HFA Preferred Risk Sharing™ & HFA Preferred™ Loans


HFA Preferred Risk Sharing™ & HFA Preferred™ Loans

Nice houseThe HFA Preferred Risk Sharing™ and HFA Preferred™ loans were developed by the Federal National Mortgage Association (Fannie Mae) for housing finance agencies (hence, "HFA"). The HFA loans are underwritten to conventional underwriting guidelines, specifically, the My Community Mortgage.

The minimum down payment with the HFA Preferred Risk Sharing™ and HFA Preferred™ loans is only 3% (For example: Sales price $100,000 X 3% = $3,000). The only difference between the two loans is that the HFA Preferred™ requires mortgage insurance if the home buyer’s down payment is less than 20%.

The HFA Preferred Risk Sharing™ does not require mortgage insurance, however, the interest rate is slightly higher in exchange for no mortgage insurance. These loans compete with the FHA home loan that requires a 3.5% down payment, and unlike the FHA loan, there is no up front mortgage insurance premium (aka funding fee).

No first-time homebuyer requirement, however, the borrower may not have an ownership interest in any other residential dwelling at the time of loan closing and must meet PHFA preferred risk sharing income limits.pdf.

Prospective home buyers must contribute at least $1,000 of their own funds. The balance of the down payment may come from an eligible Community Second, a gift, grant or unsecured loan from a relative, domestic partner, fiancé/fiancée, or from a church, a public agency, a municipality or a nonprofit other than a credit union.

Eligible Properties

1. One unit properties only (i.e. single family home)
2. No duplexes
3. PUDs (Planned urban developments) are acceptable, provided the subject development meets Fannie Mae guidelines
4. No manufactured housing (i.e. mobile homes)
5. No condos
6. Property must be the primary residence

Non-occupying borrowers are not permitted (aka co-signers)

PHFA Program Comparison FHA HFA Preferred™ Conventional 95% HFA
Preferred Risk Sharing™
Purchase Price $120,000 $120,000 $120,000 $120,000
Down payment Requirement $4,200 (-3.5%) $3,600 (-3%) $6,000 (-5%) $3,600 (-3%)
Loan Amount $117,827
($115,800 base)
$116,400 $114,000 $116,400
Upfront MIP Payment
at Closing
$2,027 $0 $0 $0
Interest Rate 3.38% 3.75% 3.63% 4.25%
Monthly Mortgage $521 $539 $520 $573
Payment (Principal and Interest)
Monthly MIP Payment $121 $75 $70 $0
Monthly Mortgage Payment (Principal and Interest and Mortgage insurance) $642 $614 $590 $573
Difference based on FHA, per month (+/-) $0 (-$28) (-$52) (-$69)