The Iowa Finance Authority (IFA) is now offering a new conventional mortgage product called HFA Preferred Risk Sharing which is available in all of IFA's mortgage programs: FirstHome, First Home Plus, Homes for Iowans and Homes for Iowans Plus. This product was created by Fannie Mae exclusively for State Housing Finance Agencies and is available in Iowa only through IFA. The HFA Preferred Risk Sharing product is unique because it allows a borrower to avoid the cost of mortgage insurance with less than a 20% down payment.

How does this product benefit borrowers? Most borrowers prefer to avoid mortgage insurance because it adds cost and does not provide a direct benefit to them. Mortgage insurance protects the lender in the event a borrower defaults on their mortgage and is paid by the borrower as part of their monthly mortgage payment. It is typically required for a mortgage where the borrower has a down payment of less than 20%. With the HFA Preferred Risk Sharing product, a borrower only needs a 3% down payment and will often find the HFA Preferred Risk Sharing mortgage is the option with the lowest monthly payment because the cost of mortgage insurance is eliminated. In addition, borrowers using the FirstHome Plus or Homes for Iowans Plus Programs can apply up to $2,500 of grant funds from IFA towards the required 3% down payment.

Since IFA assumes additional risk for this product that would typically be covered through mortgage insurance, the interest rate for HFA Preferred Risk Sharing is higher than the products with mortgage insurance. However, for a typical IFA mortgage, the HFA Preferred Risk Sharing option still provides for the lowest monthly payment when compared to an FHA mortgage or a conventional mortgage with mortgage insurance.  

For more information or to apply for an IFA mortgage, please visit an IFA Participating Lender.