With the booming housing market in Connecticut, first-time homebuyers will find it more difficult than ever to purchase their first home.
The Connecticut Housing Finance Authority CHFA has programs to help first-time homebuyers with down payment and closing cost assistance, save money on insurance, and get lower than market interest rates on a mortgage.
CHFA defines a first-time home buyer as someone who has not owned a home in the last three years.
National First-Time Homebuyer Loan Programs
- FHA Loans – FHA home loans are very popular with first-time homebuyers cause they require a 580 credit score with just a 3.5% down payment. Debt-to-income ratios up to 50% are allowed making them perfect for low-income borrowers.
- Conventional Loans – Conventional loans require a 620 credit score and a 5% to 20% down payment. If you put 20% or more down, mortgage insurance will not be required.
- USDA Loans – USDA mortgage loans are for low-to-median income borrowers buying a home located in a USDA-eligible rural area. They provide 100% financing with a 620 or higher credit score. Mortgage insurance is required but the rate is the lowest of any type of mortgage program available.
- VA Loans – Veterans of the U.S. military may be eligible for a VA home loan. No down payment or mortgage insurance is required and veterans with a 580 to 620 credit score are eligible.
- HomeReady and Home Possible Loans – Freddie Mac and Fannie Mae created the HomeReady and Home Possible loan programs for low-income first-time homebuyers whose income does not exceed 100% of the area median income requiring just a 3% down payment and a 620 credit score.
HFA Advantage and HFA Preferred Loan Programs
The down payment is the biggest barrier to buying a home for first-time buyers. CHFA programs are for borrowers who can afford the monthly mortgage payments but do not have the upfront funds. CHFA offers down payment assistance (DPA) in the form of a second loan to help you with the down payment and closing costs. The interest rate on a second loan is the same as your mortgage loan.
- Up to $20,000 in assistance to cover closing costs and down payment
- A low-interest rate on the second mortgage
- Must be a first-time homebuyer or have not owned a home in the last 3 years
- Occupy the home as your primary residence
- Purchase price below the CHFA sales price limit
- Have an income below 80% of the area median income (AMI)
- Must attend a free Homebuyer Education course prior to closing
- If more than $10,000 in savings must be applied to the down payment and closing costs ( Waived for qualified Police Officers and Teachers Program loans)
- Must qualify for a CHFA mortgage from a CHFA-Approved Lender
- Single-family homes and townhouses
- Eligible Condominiums
- Planned Unit Developments (PUDs)