For those of my followers who may not be aware, I wanted to write a quick note about a new Connecticut state program providing forgivable down payment assistance to low and moderate-income homebuyers. This is truly a good deal for those who are looking to try and escape from ever-increasing rents, and adds fuel to the “why rent when you can own?” fire. The program was announced in June of this year.

How Much Money is available for Down-Payment Assistance via a CHFA Loan in Connecticut?

Connecticut is providing forgivable down-payment assistance in a new program via CHFA loans. The program provides for up to $50,000 in assistance (but only for certain properties). As long as the borrower qualifies, up to $25,000 should be available even for properties which are not in “High or Very High” Opportunity Areas. The purpose of the program is to “alleviate potential homebuyers' inability to cover the down payment and closing costs required to purchase their first home.”

Who Can I speak with about getting a loan for Down Payment Assistance?

The Connecticut Housing Finance Authority (“CHFA”) provides a list of approved lenders on their website. While specific contacts are listed in the site, any broker or loan officer for one of the lenders listed should be able to help a homebuyer navigate the process of applying for a CHFA loan, which is a requirement of the assistance program.

How Does the Program Work?

The program works by providing a loan in addition to the first mortgage on the property. The down payment loan is structured as a 0% 10-year loan with no payments required. Every year, 10% of the principal balance is forgiven. So, after 10 years, if you are still living in the home, there is nothing left of the down payment loan to pay back, and you would not have paid anything towards it.

Source: https://www.chfa.org/homebuyers-homeowners/homebuyers/time-to-own-down-payment-assistance-program-loan/

Do I Qualify for Down Payment Assistance for the Purchase of a Connecticut Home?

Applicants must qualify for and receive a CHFA first mortgage. You must have been a resident of Connecticut for the most recent three years, and you must be a first-time homebuyer, OR be buying a property in certain targeted areas of the state.

Does My Property Qualify?

All Connecticut properties where a CHFA loan would be available to a buyer qualify for the program, but only properties in “High” or “Very High” Opportunity Zones qualify for the full $50,000.

How Much Money is being made Available to Homebuyers from CHFA?

The assistance is capped at 20% for a down payment on the home plus up to 5% for closings costs. The minimum amount of the assistance loan is $3,000, and the maximum amount is $25,000 (or $50,000 in certain areas).

Will Funding Run Out?

Currently, CHFA still has $5,210,372 available for these loans, but it expects to receive an additional $20 Million following the next state bond commission meeting. Eventually funding will run out. But it should be available.