When you’re buying a home in Connecticut, you have many lending options for your mortgage. If you’re a first-time homebuyer or haven’t owned a home in a while, these choices can be overwhelming.
Fortunately, the Connecticut Housing and Finance Authority (CHFA) makes it simple by offering easy-to-use first-time homebuyer mortgages. If this is your first home purchase or you haven’t owned a home in the last three years, you should consider this program.
What are CHFA mortgages and how can you apply for one? Here’s what you need to know.
The Traditional Home Buying Process
Generally, if you want to buy a home, the first step is to save up a 20% down payment and get pre-approved for a mortgage. You’ll then work with a professional real estate agent to find the right home, and connect with a lender for a traditional mortgage with market interest rates.
Fortunately, you have other options. With CHFA you can save on your mortgage, and you can also choose a real estate agent that may give you a home buyer rebate up to 1% of the price of the home.
Understanding CHFA Mortgages
The goal of the CHFA mortgage program is to help Connecticut residents become homeowners more easily. Buying a house is a complex process. You should always work with a quality real estate agent to get the guidance you need.
In order to qualify for a CHFA mortgage, you need to be a first-time homebuyer or not have owned a home in the last three years. You may also qualify if you’re purchasing a home in a targeted area.
The home you’re trying to buy also needs to be within CHFA price limits, and your income must meet specific requirements. The income and price limits vary from town to town, so use the state resource map linked above to make sure you qualify.
Types of CHFA Loans
The Connecticut Housing and Finance Authority has a variety of programs available, and your real estate agent can direct you to a CHFA-approved lender to help you choose the one that’s right for you. These programs are designed for primary residences, not vacation or investment properties.
FHA Advantage® and FHA Preferred™ Loan Programs
If you’re concerned about mortgage insurance because you don’t have a 20% down payment saved, these programs can help. You won’t pay any upfront mortgage insurance costs, and your monthly mortgage insurance payment will be lower. When you reach 20% equity, the mortgage insurance payments end.
The following types of properties are eligible for these FHA loan programs:
- Homes or townhomes
- Fannie Mae or Fannie Mac eligible condominiums
- Planned Unit Developments (PUDs)
- Two-to-four unit homes (HFA Preferred™ only)
Homebuyer Mortgage Program
Mortgages can be prohibitively expensive. The Homebuyer Mortgage Program allows you to access low-interest rate loans so that even if you have a lower or moderate income you can buy a home. You’ll start by attending a free homebuyer education course either online or in person.
With this program, you’ll be able to secure a below-market interest rate and can access down payment assistance. You can even get an exception to the sales price and income limits in certain towns.
The types of homes eligible for the Homebuyer Mortgage Program include:
- Single-family homes and townhomes
- Planned Unit Developments (PUDs)
- Condominiums approved through the FHA, VA, or USDA-RD
- Two-to-four unit homes that have been used as a residence for the past five years
- Two-family homes that are newly constructed and meet FHA energy efficiency standards
Down Payment Assistance Program (DAP)
Many Connecticut residents assume they cannot buy a home because they don’t have enough money saved for a down payment. DAP allows you to get a low-interest loan that functions as a second mortgage to cover the down payment. This can be a lifesaver for those looking to buy a home.
To qualify, you must apply for and qualify for a CHFA first mortgage and attend a homebuyer's education class. You also must show the ability to repay both loans.
Your DAP loan will be at least $3,000, but no more than the minimum down payment required, which is usually between 3% — 3.5% of the home price. Your lender will walk you through the process.
Connect With a Real Estate Agent to Get Started
If you’re ready to become a Connecticut homeowner, the first step is to connect with an experienced Clever Partner Agent. They can provide the guidance and information you need to find the perfect home and connect with the right CHFA lender. Your dream home is out there — the right professional will help ensure you find it.