Connecticut First-Time Home Buyer Programs
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Buying a first home in Connecticut can be a financial challenge. Help is available for first-timers, whether they’re shopping for a New Britain colonial, a New Haven condo or a New London cottage. Since 1969, the Connecticut Housing Finance Authority, or CHFA, has assisted low- to moderate-income first-time home buyers with below-market-rate mortgages and down payment assistance. CHFA considers you a first-time buyer if you have not owned a home within three years.
National first-time home buyer programs
Many first-time home buyers take advantage of these national loan programs, which feature low down payment or flexible credit requirements. These loans are available nationwide through most lenders.
Conventional mortgage
Best for:
Low down payments, limited mortgage insurance premiums
What you need to know:
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
Choosing the right home loan can boost your chances of approval and may save you thousands in the long run.
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VA loans
Best for:
Military, low down payments
What you need to know:
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
FHA loans
Best for:
Low credit score, low down payments
What you need to know:
This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.
USDA loans
Best for:
Low down payments, rural home buyers
What you need to know:
A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.
CHFA highlights and eligibility requirements
Connecticut offers first-time home buyers several ways to afford a home in the Constitution State. And, for those eligible, down payment assistance is available with some loans.
» MORE: Tips for first-time home buyers
Highlights
Down payment assistance is available with most loans.
Programs are available for public housing tenants, educators, police and disabled and military borrowers.
First-time home buyer requirement is waived, and a rate discount offered, in federally designated areas targeted for revitalization.
Eligibility
The home must be your primary residence.
Home price and income limits apply.
Free home buyer education is required.
» MORE: Compare the best CHFA lenders
CHFA first-time home buyer loan programs
HFA Advantage and HFA Preferred Loans
Best for:
Low mortgage insurance, low interest rate
What you need to know:
These loans offer eligible first-time home buyers lower monthly mortgage insurance premiums with a conventional mortgage. No upfront mortgage insurance payment is required, and the mortgage insurance is canceled when your equity reaches 20%. Limits on borrower income and sales price vary by location.
Military Mortgage Option
Best for:
Military
What you need to know:
First-time home buyers who are current service members or veterans, including the Army National Guard and Air National Guard, may receive an additional 0.125 percentage point discount on CHFA’s below-market interest rates.
Teachers Mortgage Assistance
Best for:
Educators
What you need to know:
To help teachers afford homeownership in communities where they work, CHFA offers qualifying first-time buyers an extra 0.125 percentage point discount on CHFA’s below-market interest rate. This interest rate reduction may be increased for eligible minority teachers.
Requirements:
Must purchase a home in a school district designated “priority.”
Or teach a subject that the state has given priority status.
An FHA, VA, USDA or conventional mortgage may be used with this program, and mortgage insurance may be required. The CHFA website lists eligible school districts and subject matter areas.
Police Homeownership Program
Best for:
First responders
What you need to know:
CHFA offers an extra 0.125 percentage point discount on its below-market interest rate for municipal police officers purchasing homes in certain cities and towns where they work. State police officers may use the program, too, if buying in participating towns. Some municipalities also offer officers grants to help with closing costs.
An FHA, VA, USDA or conventional mortgage may be used with this program, and mortgage insurance may be required.
Home of Your Own Program
Best for:
Disabilities
What you need to know:
First-time home buyers with a disability may be eligible for either a low-interest home loan with no down payment or down payment assistance. If you are not disabled but a disabled family member will be living in the home with you, you may be eligible. Documentation of the disability is required.
Homeownership for Public Housing Residents
Best for:
Public housing residents
What you need to know:
Tenants in public housing and those using housing assistance may be able to use CHFA’s below-market interest rates to buy a first home. Qualified tenants must rent in public housing or get rental assistance from CHFA, the Department of Housing and Urban Development or a local housing authority. You’ll also need to meet minimum standards for employment, credit and income.
Down Payment Assistance Loan
Best for:
Down payment assistance
What you need to know:
First-time borrowers also may be able to get a second mortgage of $3,000 or more to cover down payment costs. The DAP loan is at the same interest rate as your primary mortgage.
Requirements:
You don’t have the savings for a down payment but do have enough monthly income to make monthly payments on both mortgages.
Any non-retirement household savings over $10,000 must be used toward your down payment (except with police and teachers program loans).
Mobile Manufactured Home Loan Program
Best for:
Manufactured homes, closing cost assistance
What you need to know:
This program can help first-time buyers purchase single- or double-wide mobile homes with low interest rates and low closing costs. Eligibility is limited to availability of state funds, and homes must be located in state-approved parks.
Conventional Area Median Income Loan Program (CALP)
Best for:
Lower mortgage insurance rates
What you need to know:
This program helps to reduce mortgage insurance rates for first-time and repeat homebuyers who have incomes higher than the area median. The home must be a primary residence, and sale price and income limits apply.
Summary: 2021 CHFA first-time home buyer programs
HFA Advantage and HFA Preferred loans with low interest rates and lower mortgage insurance premiums.
Military Mortgage Option with interest rate discount for current service members or veterans.
Teachers Mortgage Assistance with interest rate discount for educators.
Police Homeownership Program with interest rate discount for law enforcement officers.
Home of Your Own Program with down payment assistance or no down payment requirement for people with disabilities.
Homeownership for Public Housing Residents with below-market interest rates for public housing residents.
Downpayment Assistance Program offering second mortgages for down payments.
Loan program for purchase of mobile homes.
Reduced mortgage insurance rates for homebuyers with incomes higher than the area median.
If these loans and programs sound like a fit for you, check out the details at the CHFA website. The next step is to contact one of the many CHFA-approved lenders who can see whether you qualify and help you apply. Also, be sure to explore every option. Ask your city’s or town’s community development department if it has other down payment assistance grants or low-interest loans.
Choosing the right home loan can boost your chances of approval and may save you thousands in the long run.
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New American Funding
on New American Funding
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