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Frost Bank Re-Enters Mortgage Biz with a Zero Down Home Loan

zero down

Frost Bank, long absent from the mortgage industry, is back in the biz and rolling out a zero down home loan for its customers.

The Texas-based depository, which also just became the new sponsor of the San Antonio Spurs arena, calls their new offering the “Progress Mortgage.”

It is intended to help both low- and moderate-income borrowers realize the dream of homeownership.

Aside from not needing a down payment, private mortgage insurance also isn’t required, and you can receive up to $4,000 in closing costs.

Read on to learn more about this product and their companion home equity loan.

Progress Mortgage Offers 100% Financing on a Home Purchase

After sitting out of the mortgage industry for more than 20 years, Frost Bank has relaunched its home loan business in the state of Texas.

While the bank is 155 years old, they exited the mortgage space in the early 2000s before getting back into the biz earlier this year.

Some may think that’s unusual, given the tough housing market conditions (and high mortgage rates), but that hasn’t stopped them.

And they’re coming to market with some pretty aggressive options to help home buyers land a property despite mounting affordability woes.

Their so-called “Progress Mortgage” offers 100% financing, meaning home buyers don’t need a down payment to qualify.

On top of that, private mortgage insurance (PMI) also isn’t required, despite the lack of a down payment.

Typically it’s compulsory if you have a loan-to-value ratio (LTV) above 80%. Not the case here.

To make the deal even sweeter, they’re also throwing in lender credits valued at up to $4,000 to offset any borrower closing costs.

This means a home buyer in the state of Texas may need little to nothing out of pocket to close their loan.

The one caveat is that the borrower must make no more than 80% of area median income (AMI), as defined by the Federal Financial Institution Examination Council.

You can look up AMIs by metropolitan statistical area here. As an example, the estimated AMI in Austin, Texas for 2023 is $122,300.

So the most you could earn would be $97,840 to qualify under the 80% AMI rule.

Another perk is that the program has no minimum or maximum loan amount as long as you qualify otherwise.

In terms of loan choice, at the moment it appears to be limited to a 30-year fixed-rate mortgage.

However, Frost Bank also offers a variety of other loan programs, including jumbo loans, 15-year fixed mortgages, and adjustable-rate mortgages such as the 10/6 and 7/6 ARM.

Frost Bank Also Just Launched a Home Equity Loan

To complement their Progress first mortgage, Frost Bank has also launched the “Progress Home Equity Loan.”

This second mortgage is also reserved for borrowers making 80% or less area median income.

And it doesn’t come with any application fees, annual fees, or prepayment penalties.

The Progress Home Equity Loan is available in terms of 7, 10, 15, 20, 25 and 30 years, and the company says in most cases there will not be closing costs.

Additionally, there is no maximum loan amount, though the max LTV ratio is 80%.

But given how much home equity many existing homeowners are sitting on, this could still provide for a sizable loan amount at a low LTV.

What really stood out to me were the advertised rates, which are apparently intended for families on a budget.

On their website, they’re displaying APRs as low as 3.99%, which compares to APRs closer to the 7-8% range for their standard home equity loan offering.

So assuming these numbers are accurate, there might be substantial savings for those with limited incomes in the state of Texas who want to tap their equity.

Frost Bank is a subsidiary of Cullen/Frost Bankers, Inc., a publicly traded company under the symbol (NYSE: CFR).

They are one of the largest banks in Texas and one of the 50 largest U.S. banks by asset size. At last glance, there are about 190 branch locations in the Lone Star State.

My understanding is these loan programs are only available to customers in the state of Texas.

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