DES MOINES -- Principal Residential Mortgage, pan of the Principal Financial Group, will grant qualified low- and moderate-income homebuyers as much as $1,250 toward the purchase of a home.
The company has earmarked $500,000 to the program, to be shared equally among the company's 24 loan origination offices. Principal Residential Mortgage expects to originate more than 400 loans as a result of the initiative.
To qualify for a grant, a borrower must be at 80% or less of median income level in the city of purchase.
The home must be in a low-to-moderate-income census tract or a minority census tract. Borrowers must provide a 3% down payment. Then, under the program, Principal Residential will grant the borrower the remaining 2%, or $1,250, whichever is less.
Will the program be profitable?
"If you look at the books in the short run, no," said Paul Bognanno, president. "In the long run, yes, we can do it. We have excess capacity on the production side, so it won't cost us extra to do these loans, We are an efficient servicer so we think we can make money servicing."