Dreambuilder Program
What is the DreamBuilder Program?
The DreamBuilder Program is a housing empowerment program that facilitates purchase transactions through a HUD-approved nonprofit government entity. It allows qualified buyers to enter a Structured Financing Agreement (lease/purchase structure) designed to transition them into full homeownership under FHA-style underwriting and protections.
Who is eligible for the DreamBuilder Program?
- Purchase transactions only; primary residence required.
- U.S. citizens, permanent residents, and eligible non-permanent resident aliens (including ITIN and DACA cases) may qualify.
- Minimum credit score guideline is generally 580; exceptions (<580 or no score) may be considered case-by-case. A minimum of one tradeline with 12 months satisfactory history is expected.
Loan Features & Limits
- Eligible up to 96.5% LTV (FHA standard balance; high balance considered with prior approval).
- 30-year fixed rate available (standard and high balance)
- Program requires a second lien equal to 1% of the lesser of purchase price or appraised value.
Income Documentation Options
DreamBuilder accepts a wide range of qualifying income methods to serve borrowers with nontraditional income documentation:
• FHA full documentation (one year)
• Bank statement only (3 months)
• Profit & Loss with bank statements
• 1099s plus bank statements
• Assets used as qualifying income (asset depletion / liquidity).
Credit, DTI, and Underwriting Highlights
- Credit: At least one bureau score; typical minimum 580; alternative tradelines and soft pulls may be accepted. Bankruptcy and prior derogatory events are allowed under specific timelines and documentation.
- DTI: Up to 60% total DTI (and up to 50% PTI) with limited exceptions; compensating factors may support higher ratios.
Property Eligibility & Appraisal Rules
- Eligible: Single-family (attached/detached), 2-unit, PUD, FHA-approved condos, modular & multi-wide manufactured homes, townhomes. Ineligible property types include 3–4 unit properties, spot-approved condos, co-ops, and single-wide mobile homes.
- Full FHA appraisal required (order from an AMC approved for DreamBuilder). AVM must be within 10% of the appraised value; larger variances require desk review or renegotiation. Appraisal must document property condition C1–C4 and meet FHA minimum property requirements.
Fees, reserves, and closing costs
Homebuyers must document sufficient liquid assets for:
- First contract/lease payment (due month after closing or collected at closing if timing requires), closing costs, and minimum down payment (typically 3.5%).
- Program fees at closing — common examples include a $1,250 program fee, one month’s contract/lease payment collected at closing, a program management fee (0.5% of purchase price), a refundable occupancy security deposit where applicable, HOA service fee, and notary fee.
Inspections, Repairs & Special rules
- Home inspection is required for properties appraised C4–C5 and for homes built before 1978. Major systems and health/safety issues must be addressed before closing when required. A certified home warranty may be required when a full inspection is completed.
- Florida: Additional requirements include a 4-point inspection and wind mitigation; unsatisfactory items must be repaired prior to closing.
How the Structured Financing Agreement works (simple overview)
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A HUD-approved nonprofit facilitates a purchase where the buyer enters a Structured Financing Agreement (often a lease/purchase arrangement).
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The buyer makes contract/lease payments as specified; first payment timing is set by the program rules.
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After the structured period and meeting program milestones, the buyer transitions to a conventional FHA mortgage product (timing and forgiveness terms vary).
Benefits of the DreamBuilder Program
- Flexible income documentation helps self-employed, gig economy, and nontraditional income borrowers qualify.
- Low down payment options (as low as FHA’s 3.5% in many cases) and high-LTV financing.
- Designed to help buyers who need time and structure to move from lease/structured financing into full homeownership.
Common Questions (FAQ)
Q: What credit score do I need for the DreamBuilder Program?
A: The general guideline is a 580 minimum; exceptions under certain conditions may be permitted.
Q: Can non-citizens use DreamBuilder?
A: Yes. U.S. citizens, permanent residents, and certain non-permanent residents (including ITIN and DACA scenarios) may be eligible — additional documentation may be required.
Q: Are solar panels allowed?
A: Yes — provided the solar panels are included in the purchase price and financed with the mortgage. Leased systems are considered on a case-by-case basis.
Q: Is rent verification required?
A: Yes — 12 months of 0x30 housing history is preferred. If not available, reserves or alternative documentation may be required. Electronic payment histories (Zelle, Venmo, PayPal) are acceptable with supporting documentation.
