Connecticut First-Time Homebuyer Programs

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Updated on Thursday, February 21, 2019

Connecticut has something for everyone: proximity to New York City, charming villages, mid-sized cities, beach communities, college towns and historic tourist attractions.If you want to set down roots in the Constitution State, know that there are several programs available for first-time homebuyers. Some programs are also available for first-time homebuyers who want to buy a two- to four-unit building. State and local agencies offer down payment assistance, closing cost help and homebuyer education.

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We researched first-time homebuyer programs and their eligibility requirements in January 2019.

Connecticut first-time homebuyer programs

The Connecticut Housing Finance Agency (CHFA) and the Housing Development Fund (HDF) administer different programs designed to help first-time homebuyers finance their purchase. Some programs are limited by household income or have purchase price limits. Others are limited to specific locations.

Eligibility for Connecticut assistance

Homebuyer assistance programs in Connecticut typically require three common elements:

  1. You must be a Connecticut resident.
  2. You must be a first-time homebuyer, which means you have not owned a home in the past three years. An exception may be made if you are buying in an area targeted for economic development.
  3. The home you purchase must be your primary residence, not an investment property or a vacation home.

HFA Advantage and HFA Preferred Loans

The HFA Advantage and HFA Preferred Loans have lower mortgage insurance premiums than standard conventional loans.

Features

  • No upfront mortgage insurance required
  • Lower monthly mortgage insurance costs
  • Mortgage insurance not required when 20% home equity is reached
  • Borrowers who purchase in a targeted area may pay an interest rate that is 0.25% below the standard rate, and unless they plan to apply for down payment assistance, their income eligibility limits are waived.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeds Federal Recapture Tax Income.

Eligibility

To be eligible, you must

  • Take a homebuyer education class
  • Meet income restrictions, which vary by location
  • Meet home price limits, which vary by location
  • If you want to buy a two- to four-unit house, you’ll need to apply for the Preferred loan, not the Advantage loan

How it works

To get started, visit the CHFA resource map for the town or city where you want to buy a home.Once you have determined that you are income-eligible and you are aware of the home price limits, you’ll need to contact an approved lender on the CHFA list of approved lenders for Advantage loans and Preferred loans.

You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Down Payment Assistance Program loan

The Down Payment Assistance Program loan, available to borrowers who qualify for an HFA Advantage or Preferred loan, is a second mortgage to provide down payment funds for first-time buyers who can afford the monthly payments to buy a home but lack savings for a down payment.

Features

  • Down payment funds in the form of a loan for at least $3,000 up to the minimum down payment required by your loan program, typically 3% or 3.5% of the home price.
  • The mortgage rate is typically the same as your first mortgage.

Eligibility

In order to qualify, you’ll have to

  • Meet the requirements of the CHFA loan program
  • Document your ability to handle the monthly payments to repay both your first and second mortgages.
  • Contribute any savings you have above $10,000, excluding any retirement savings.
  • Pay a $200 application fee.

How it works

You will apply for the down payment assistance loan with the same lender you use to apply for your HFA Advantage or Preferred mortgage. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA FHA 203(k) Renovation Mortgage

The CHFA FHA 203(k) Renovation loan program allows you to finance the cost of limited or full renovations of a property you want to buy with a below-market-rate mortgage. The program can also be used to purchase and renovate an abandoned house or a foreclosure.

Features

  • Below-market interest rates.
  • Ability to finance home improvements into your mortgage.
  • Can be used for a single-family home, an FHA-approved condominium and a two- to four-unit building.
  • FHA mortgage insurance is required.
  • Funds for home repairs will be held in a separate account by your lender and disbursed to the contractor. If there are funds left over after the renovation, they will be applied to your principal balance.
  • If you purchase in an area targeted for economic development, your interest rate will be reduced by 0.25% and the income limit will be waived.

Eligibility

  • In addition to meeting the CHFA loan requirements, including home price limits and income limits, the total cost of your finished home must be at or below FHA limits for your area. FHA limits vary by location.
  • You must have a contract for your renovations with a state-licensed general contractor.
  • Renovations up to $35,000 are considered a “limited” FHA 203(k) loan; structural renovations and amounts above $35,000 will be considered a “standard” FHA 203(k) loan.

How it works

To get started, visit the CHFA resource map for the town or city where you want to buy a home.
Once you have determined that you are income-eligible and you are aware of the home price limits, you’ll need to contact an approved lender on the CHFA list for FHA loans. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Military Homeownership Program

The Military Homeownership Program offers low interest loans to members of the military, veterans and eligible surviving partners. Down payment assistance may also be available.

Features

  • Interest rate 0.125% lower than the standard mortgage rate.
  • Down payment assistance is available to qualified borrowers.
  • In some areas, there are exceptions to both the sales price and income limits.
  • Mortgage insurance is required for loans with a down payment of less than 20%.
  • If you purchase a home in a targeted area, the income limits are waived.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeds Federal Recapture Tax Income.

Eligibility

  • You must meet requirements of CHFA loans, including income and sales price limits.
  • You must be a veteran; active servicemember; or a surviving spouse, civil union partner or unmarried partner of veterans who died as a result of their military service or a service-related disability.
  • Loan program can be used for a single-family home, an FHA-, VA- or Fannie Mae-approved condo, a two- to four-unit building that has been used as a residence for five years or longer, or for a newly built two-family house if it meets FHA energy-efficiency requirements.

How it works

To get started, visit the CHFA resource map for the town or city where you want to buy a home.
Once you have determined that you are income-eligible and you are aware of the home price limits, you’ll need to contact a CHFA approved lender. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Teachers Mortgage Assistance Program

The Teachers Mortgage Assistance Program provides lower cost mortgages to teachers who teach and buy a home in a state-designated priority or transitional school district, or to teachers who teach in a subject matter shortage area.

Features

  • Interest rate is 0.125% lower than an already below-market mortgage rate.
  • Down payment assistance is available for a low interest second mortgage of at least $3,000.
  • No asset limits are required.
  • If you purchase a home in a targeted area, the income limits are waived.
  • Mortgage insurance is required for loans with a down payment of less than 20%.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeded Federal Recapture Tax Income.

Eligibility

  • Teachers must work and a purchase a home in a state-designated priority or transitional school district or teach in a specific subject matter area.
  • Teachers must also meet requirements of CHFA mortgage programs.
  • The loan program is available for single-family homes, condos approved by FHA or Fannie Mae, and two- to four-unit buildings that have been used as a residence for five years or longer.

How it works

To get started, check to see if you work in a state-designed priority or transitional school district or teach a subject on the state list of priorities. Next, contact a CHFA-approved lender. You can apply for down payment assistance with that same lender. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process

CHFA Police Mortgage Program

The Police Mortgage Program is designed to help police officers purchase homes in the areas they serve.

Features

  • Interest rate 0.125% lower than an already below-market mortgage rate.
  • Down payment assistance is available for a low interest second mortgage of at least $3,000.
  • No asset limits are required.
  • If you purchase a home in a targeted area, the income limits are waived.
  • Mortgage insurance is required for loans with a down payment of less than 20%.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeds Federal Recapture Tax Income.

Eligibility

  • Municipal police officers must buy a home in the city or town where they work.
  • State police officers must buy a home in a participating city.
  • Police officers must also meet requirements of CHFA mortgage programs.
  • The loan program is available for single-family homes, condos approved by FHA or Fannie Mae, and two-to-four unit buildings that have been used as a residence for five years or longer

How it works

To get started, find out if you work in a participating city or town or want to buy a home there. Next, contact a CHFA-approved lender. You can apply for down payment assistance with that same lender. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Home of Your Own Mortgage Program for Disabled Persons

The Home of Your Own Mortgage program provides special loans for households with disabled residents.

Features

  • Low interest loan.
  • Down payment assistance is available for a low interest second mortgage of at least $3,000.
  • If you purchase a home in a targeted area, the income limits are waived.
  • Mortgage insurance is required for loans with a down payment of less than 20%.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeded Federal Recapture Tax Income.

Eligibility

  • You must provide proof of your disability or the disability of a family member who will be living in the household.
  • You must also meet requirements of CHFA mortgage programs.
  • The loan program is available for single-family homes, condos approved by FHA or Fannie Mae, and two- to four-unit buildings that have been used as a residence for five years or longer.

How it works

To get started, visit the CHFA resource map for the town or city where you want to buy a home.
Once you have determined that you are income-eligible and you are aware of the home price limits, you’ll need to contact a lender on the CHFA-approved lender list. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Homeownership for Residents of Public Housing

The Homeownership for Residents of Public Housing program is designed to help people make the transition from subsidized rental housing to homeownership.

Features

  • Low interest loan.
  • Down payment assistance is available.
  • if you purchase a home in a targeted area, the income limits are waived.
  • Mortgage insurance is required for loans with a down payment of less than 20%.
  • In rare cases, you might be required to pay a Federal Recapture Tax. CHFA may reimburse you for these taxes, which could be incurred if you sell your home for a profit within nine years and your income at that time exceeded Federal Recapture Tax Income.

Eligibility

  • You must be receiving rental assistance or live in public housing. You may also qualify if you live in a property that is
    • Managed or financed by CHFA or
    • Managed by a local housing authority or
    • Subsidized by HUD.
  • Minimum credit score, income and employment standards will be required by the lender.
  • You must also meet requirements of CHFA mortgage programs.
  • The loan program is available for single-family homes, condos approved by FHA or Fannie Mae, and two- to four-unit buildings that have been used as a residence for five years or longer.

How it works

To get started, visit the CHFA resource map for the town or city where you want to buy a home.
Once you have determined that you are income-eligible and you are aware of the home price limits, you’ll need to contact a lender on the CHFA-approved lender list. You can also sign up for a homebuyer education class, since you’ll need to take that before you complete the homebuying process.

CHFA Mobile Home Mortgage Program

The Mobile Home Mortgage Program, administered by the CHFA-approved lender, Capital for Change, is meant to increase affordability for buyers of single- or double-wide manufactured homes.

Features

  • Below-market interest rate mortgage.
  • Low closing costs.
  • Low mortgage payments.
  • Down payment of 20% required — down payment assistance is not available.

Eligibility

  • In addition to the standard CHFA requirements, including income limits and home price limits, you must be purchasing a manufactured home that will be fixed to a permanent foundation in a state-licensed mobile home park.
  • Your home must be a year-round residence.
  • You must sign a renewable yearly lot lease agreement.

How it works

To start, you’ll need to complete a worksheet that establishes that you meet specific criteria. Then you can contact the approved lender for this program, Capital For Change.

HDF SmartMove CT program

The Housing Development Fund’s SmartMove loan program offers low interest loans with low down payment options for first-time homebuyers.

Features

  • Low interest mortgage.
  • Down payment options as low as 1%.
  • Down payment assistance in the form of a loan that must be repaid either monthly or deferred and paid when you transfer, sell or refinance the property.
  • You can borrow as much as 20% of the purchase price for down payment costs, but you must contribute any savings you have above $25,000, other than your retirement funds, toward down payment and closing costs.
  • Generally, borrowers should expect to contribute 1% to 3% of the purchase price.

Eligibility

  • Borrowers must meet income limits of 100% or less of area median income by county, which ranges from $86,900 to $111,200.
  • Home must be within the HDF service area.
  • Borrowers must take a homebuyer education class and have one-on-one homebuyer counseling.

How it works

First, determine if your household income fits within HDF’s income limits, which vary by county. Next, contact an approved lender and look into your homebuyer education options.

HDF Live Where You Work (LWYW) program

The Housing Development Fund’s Live Where You Work program is designed to make housing more affordable for first-time buyers and to reduce transportation costs and commute time.

Features

  • A 30-year fixed-rate loan with 0% interest for up to $20,000 for down payment and closing costs.
  • You will be required to pay a $750 loan fee.
  • Can be used with other loan programs, such as HDF’s SmartMove CT loan.

Eligibility

In order to qualify you must

  • Have a household income at or below 80% of area median income, which varies by location and household size, from $36,568 to $142,454.
  • Be buying a home in the same town where you work.
  • Take a homebuyer education class and have one-on-one homebuyer counseling.

How it works

First, be sure you intend to buy a home in the same town where you work. Then determine if your household income meets the program’s limits. Next, contact an approved lender and look into your homebuyer education options.

National first-time homebuyer programs

As you can see, Connecticut offers a variety of statewide and local first-time homebuyer programs that may help you buy your first property. Whether or not you qualify for these programs, you may also want to look at national programs that could provide a path to homeownership. Check out LendingTree’s national first-time homebuyer guide.

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