Refinancing out of NACA before 5y mark?

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    Hello! We successfully purchased a home through NACA last year, but I wanted to know if it’s possible to refinance OUT of NACA before the 5 year mark.

    I realize there’s a lien on the (house? mortgage? deed?) which enforces primary residency in the house which can be removed after five years or if there’s some sort of emergency. Does the lien need to be removed before refinancing? Does the lien matter at all for refinancing?

    Low equity going into the refinance isn’t a concern–we got a good deal on the house and expect it to appraise well above what we owe–and other finances aren’t an issue. My question is only about how the lien factors in to refinancing.


    I would be interested in seeing the answer to this!


    Hello Madeleine,

    First, let me clarify a few things. The owner occupancy requirement does place a $25,000 lien on the home for the life of the loan. This is done to prevent greedy property investors from taking advantage of the NACA program, which is designed to build owner occupancy as part of our mission of stabilizing neighborhoods. It also prevents the creations of equity-robbing HELOCs and other types of equity loans based on the reason for obtaining the loan.

    You may refinance the loan at any time. You will have to have the lien released to do so, and can begin the process by contacting"> with your request. They will walk you through the process from there.

    I need to make an important distinction here however. Refinancing in under five years is not the same thing as selling in less than five years. If you re-sell the property in under five years, a penalty will be assessed unless you can prove that the move is an unanticipated necessity for reasons beyond your control, such as a forced job relocations or major family emergency.

    The penalty is on a sliding scale and also based on the $25,000 lien. If you sell during:
    Year 1 – $25,000 penalty
    Year 2 – $20,000 penalty
    Year 3 – $15,000 penalty
    Year 4 – $10,000 penalty
    Year 5 – $5,000 penalty

    This is again to prevent property investors from abusing the NACA program by doing a slow flip or simply sitting on the property for a few years while property values are rising quickly just to score a quick profit.

    Tim Trumble
    Online Operations, NACA">


    Yup, all good! We ended up successfully refinancing for a better rate and savings on the mortgage–just bad timing on the rate last year and really good timing for us this year. The loan officer for the new loan was able to get in contact with NACA to get the lien removed. We’re still planning on living in this house for years to come and we’re grateful to NACA helping us get in 🙂


    Thank you for sharing your personal experience Madeleine. I jumped on the form specifically to see how this works. We are refinancing as well and wanted to get information on the process.

    Thanks Leslie


    Where is the seller’s penalty listed @TTrumble? Is it in the Purchase Workbook or on one of the documents for the bank application? I’ve never seen it before. I have only been told that a $25,000 lien would be placed on the property for owner occupancy.

    Anyone with knowledge, please respond. Thanks.

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