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

New American Funding Mortgage could be a great first stop for borrowers who think they might not qualify for a mortgage, 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 Mortgage review

This mortgage lender is a good fit for: Borrowers who need a low down payment mortgage. New American Funding Mortgage 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.
• Energy-efficient mortgages: This loan type is used to finance certain home improvements.
• 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 connects 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.

High allowable DTI

New American Funding can approve some borrowers with a debt-to-income ratio of more than 45%, higher than some other banks allow.

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 refis, and a mortgage calculator. Current mortgage rates are prominently displayed.

Inclusion initiatives like bilingual customer service

New American Funding places a high priority on providing services in both Spanish and English to better serve the Hispanic community. New American Funding Mortgage is Hispanic-owned and places a special emphasis on serving the Latino community. At New American, 19% of purchase loan volume is to Hispanic borrowers, compared with an industry average of 8.5%. 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+ BBB rating.

What could be improved

No home equity loan or HELOC

New American Funding does not currently offer either a home equity loan or a home equity line of credit. If you want to tap the equity in your home, you need to take a cash-out refinance or specialty loan. That's especially inconvenient for borrowers who want a HELOC to avoid borrowing even one dollar more than they ultimately need.

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.

Alternatives to consider

Axos Bank discloses its mortgage lender fees and promises to waive its origination fee for existing customers who borrow at least $250,000. For smaller loans, Axos offers a $200 lender fee discount. Borrowers who aren't currently customers can qualify by opening a new account during the application process.

PNC Bank still offers a home equity line of credit (HELOC), unlike many major lenders who have temporarily suspended applications for home equity credit products. Rates are disclosed online, without requiring any personal information.

How to qualify

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

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 below 620, you can apply for an FHA loan. You may need a bigger down payment or a lower debt-to-income ratio, or both. Your loan officer can help you decide which loan product is the best fit for your situation.

The down payment requirement varies with the loan type. New American Funding offers many choices for borrowers looking for a low down payment mortgage.

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.

The debt-to-income (DTI) ratio is a figure all mortgage lenders look at. It is the sum of all of your required monthly debt payments (including the housing payment on the home you want to buy) expressed as a percentage of your gross income (before taxes). Only the required minimum monthly payments that appear on your credit report are used in the calculation. At New American Funding, your DTI should be under 45% (28% without the proposed housing expense) for a conventional loan. The lower your DTI, the higher the monthly payment you can qualify for.

How are New American Funding's refinance rates?

The advertised current mortgage loan rates at New American Funding are among the lowest in the industry. 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. You pay fees to get the lowest rates. When we checked, New American Funding's advertised rates assumed that the borrower would pay at least 1.625 mortgage discount points. That means a fee equal to 1.625% of the loan amount. In other words, if you borrow $300,000, you pay $4,875 to get New American'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 Mortgage 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 Mortgage 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."