CHFA Loans: What to Keep in Mind?

Did you know that McCue Mortgage, with locations in New London and New Britain, is the No. 1 lender of CHFA loans in the state? A program specific to Connecticut first-time homebuyers and those looking in federally-targeted areas, CHFA loans are issued through the Connecticut Housing Finance Authority. Lower down payments – a common characteristic of government mortgages – is one asset of CHFA loans, as is lower interest. Essentially, the loan expands homeownership opportunities in the state, particularly to those not qualifying for or benefitting from conventional programs.

Another aspect overlapping with other government loans is income limits, which vary by region. However, buyers purchasing in targeted areas are exempt, unless the Downpayment Assistance Program (DAP) is used.

Along with this aspect are multiple programs further benefitting qualified borrowers. Special rates and loans are open to military, police, and teaching professionals and to tenants of publicly-assisted housing, Section 8, or with disabilities. Borrowers interested in rehabilitating or purchasing an abandoned, foreclosed, or bank-owned property have the option of home improvement loans, HERO, or the Urban Rehabilitation Homeownership Program (UR Home).

CHFA loans are not a financing option for all properties. Instead, the mortgage must specifically be applied to a year-round residence and not, rather, to a recreational, vacation, investment, commercial, or rental property. The house or property may be existing or a new single-family home, a townhouse, a planned unit development, a newly-constructed home meeting FHA-energy efficient standards, an FHA-approved condominium, and an FHA-approved mobile home.

Mortgage insurance is a further factor to keep in mind. All CHFA loans must be insured under the Federal Housing Administration (FHA), Veterans Administration (VA), or USDA Rural Development. However, if a borrower decides to make a 15-percent or greater down payment, he or she has the option of private mortgage insurance. For down payments over 20 percent, the mortgage insurance requirement is waived.