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For Homebuyers 

Frequently Asked Questions by Homebuyers

The Connecticut Housing Finance Authority (CHFA) has compiled the following FAQs to provide basic information to prospective homebuyers interested in learning about CHFA mortgage programs and the home buying process.

How do I know that I am ready to buy a home?

If you are thinking about buying a home for the first time but are not sure you are ready, CHFA encourages you to learn as much as you can about what is involved in buying and owning a home before you begin.

CHFA’s website has many resources to assist you.    Use the homebuyer mortgage calculator to discover whether you are financially prepared to buy a home.  Contact and meet with a CHFA-approved Participating Lender to assess whether you pre-qualify for a mortgage.  Read the First-time Homebuyers Guide to learn about the process generally followed in finding and purchasing a home.  Review CHFA’s homebuyer programs to learn if you meet CHFA mortgage eligibility requirements.

After assessing your financial readiness to embark on homeownership, you may discover that renting is the better option for you at this time.  This is also an opportunity to learn the steps you may need to take to prepare yourself for the responsibility of homeownership in the future.   

Does CHFA require me to attend homebuyer classes before I get a loan?

Yes, some CHFA mortgage programs require borrowers to attend either a three-hour or an eight-hour homebuyer course before they close on their mortgage. (See, CHFA Homebuyer Programs.)  The eight-hour course, however, is also open to anyone interested in learning more about homeownership and includes individual credit repair and debt management counseling as well.  CHFA offers these courses each month at various locations throughout the state at no cost to homebuyers.  (See, Homebuyer Education schedule of classes.)    


Who is eligible for a CHFA loan?

Generally, CHFA endeavors to assist new homebuyers in purchasing their first home.  However, prior homeowners may qualify for a CHFA home loan if they haven’t had an ownership interest in a home for at last three years or if they propose to move to a home located in a targeted area of the state.  

Many CHFA loan programs limit eligibility by household income and home sales prices. An eligible borrower’s before-tax household income can not exceed CHFA’s established income limits and the sales price of the home can not exceed CHFA’s sales price limits.  

CHFA does not finance the purchase of commercial property.   The home you buy must be your year-round, primary residence.  A CHFA-approved Participating Lender can advise you whether you qualify for a CHFA loan.      


How do I apply for a CHFA loan?

Contact a CHFA-approved Participating Lender.  The lender will assess whether you meet the requirements for a CHFA mortgage program and will guide you through the application process.     

What property is eligible for a CHFA loan?      

A dwelling eligible for CHFA financing can be a single family residence, a two to four family residence or a unit in an approved condominium complex or planned unit development.  

In the case of a two-to-four-family residence, at least one of the units must be owner-occupied and the building must have been used as a residence for at least five years.  

A newly constructed two-family home located in a targeted area may also be eligible for CHFA financing.  CHFA city, town or statewide sales price limits will also apply to homes eligible for CHFA mortgages.  


Can I get help with my down payment and closing costs?

If you qualify for a CHFA first mortgage and lack sufficient funds to cover the down payment or closing costs, you may apply for a second mortgage of at least $3000 or up to 25% of the purchase price of your home under the Downpayment Assistance Program.       


What’s the most I can earn to qualify for a CHFA mortgage?

Many CHFA mortgage programs use statewide, city and town income limits that establish ceilings on the total household income of an eligible CHFA loan applicant. However, there are no income limits if you are buying a home in a targeted area.   

(See, CHFA’s Homebuyer Programs for more details.)  


How is “household income” calculated?

CHFA calculates “household income” by counting all sources of before-tax income from the mortgagor(s) only.  

The following may be counted as sources of income for the purposes of calculating “household income”; regular earnings; overtime; part-time earnings; unemployment compensation; bonuses; dividend and interest income; child support; commissions income; military allowances; welfare payments; disability payments; pension; annuity; retirement; and social security benefits; and income for services in the military reserve or National Guard.         


Is there a sales price limit on a home I can purchase with a CHFA mortgage?  

Many CHFA mortgage programs use city or town sales price limits that establish ceilings on the purchase price of a home eligible for CHFA financing.    

(See, CHFA’s Homebuyer Programs for more details.)        


Are CHFA mortgage programs only for first-time homebuyers?

No. While CHFA mortgage programs are intended primarily to benefit first-time homebuyers, previous homeowners that meet the other eligibility guidelines may apply for a CHFA home loan as long as they have not had an ownership interest in a principal residence for the past three years. Previous homebuyers who intend to purchase a home in a federally targeted area of the state may also be eligible for a CHFA loan.      


Does CHFA inspect the home I purchase?

No, CHFA does not inspect the home.  However, most prudent homebuyers arrange and pay for an independent inspection of the home they intend to purchase in order to ensure its structural and functional integrity and that their interests are protected in the contract. (See, First-Time Homebuyer Guide for more information on home inspections.)  

Though CHFA does not require a home inspection, a property eligible for a CHFA loan must be appraised, and if needed, repaired to comply with relevant building codes. The lender will order the appraisal and any subsequent repairs that may be required must be completed before the closing of the loan, except in the case where an escrow has been established to pay for the repairs. 


What’s the difference between an appraisal and an inspection?  

An appraisal is intended to assess the value of a home based on the value of comparable homes in the neighborhood to establish the value of the collateral that will secure the mortgage loan if approved.  All lenders and mortgage insurers require an appraisal to confirm that the home and the value of the home meet their requirements.  

While an appraisal usually involves a visual inspection of the home, a home inspection involves a more detailed and specific assessment of the condition of all elements of a home, from structural elements to plumbing, heating and air conditioning.  A home inspection is intended to ensure that a homebuyer is thoroughly informed as to the condition of the home prior to purchase. (See, First-Time Homebuyers Guide for more information on home inspections.)  


Do all CHFA loans have to be insured?

Yes, under most CHFA loan programs mortgage insurance is required. The mortgage must be insured either through the Federal Housing Administration (FHA), the Veterans Administration (VA), or the USDA Rural Development (RD).

When utilizing the HFA Preferred Loan Program, private mortgage insurance is allowed.  

No mortgage insurance is required when a borrower makes a down payment of at least 20%.  

(Your CHFA-approved Participating Lender can discuss mortgage insurance requirements.)      


What is the minimum down payment required for a CHFA loan?  

The minimum down payment of an FHA-insured mortgage is 3.5% of the purchase price of the home.  No down payment is required for a VA or RD guaranteed mortgage.

The minimum downpayment for the HFA Preferred™ Loan is 3% of the purchase price.     


Can I buy a condominium with a CHFA mortgage?  

Condominium units are considered eligible dwellings for the purpose of most CHFA mortgage programs.  However, a condominium complex must first be approved on FHA's Approved Condominium list, or Fannie Mae approved if coming in through HFA Preferred Loan Program or an uninsured loan with 20% down. 


What is the Recapture Tax and how does it work?

In rare circumstances, CHFA mortgage loans may be subject to the Federal Recapture Tax at the time the property is sold.  The tax might apply if a borrower sells his or her home within nine years of the purchase date, makes a profit on the sale and has an income that exceeds federal recapture tax limits at the time of the sale.   You may be eligible to receive reimbursement from CHFA if you are required to make the Federal Recapture Tax payment.


Are co-signers allowed if I can’t qualify for a CHFA loan on my own?

No, co-signers are not allowed.  CHFA loans are only available to borrowers who purchase a home they will live in year-round as their primary residence.  


Is there a minimum credit score to qualify for a CHFA home loan?  

No.  CHFA does not have a minimum credit score. Applications that require mortgage insurance will be subject to the qualifying guidelines of the insurer which may include a minimum credit score. A loan applicant should discuss this with a CHFA-approved Participating Lender who can provide additional information regarding any credit score requirement for the loan application.  


What are CHFA credit guidelines for qualifying for a loan?

CHFA lenders follow the guidelines of the mortgage insurer of the loan to determine whether a loan applicant is credit-worthy.  A lender will follow Fannie Mae guidelines when a borrower has 20% or more towards a down payment and mortgage insurance is not required.  

CHFA loan applications are reviewed on a case-by-case basis.   An applicant that has filed for bankruptcy in the past may still qualify for a CHFA loan so long as two years have elapsed since his or her debts were discharged.    


What are CHFA employment guidelines for qualifying for a loan?  

CHFA lenders follow the guidelines of the mortgage insurer of the loan with regard to the employment history of a loan applicant.  Generally, an eligible borrower will have at least two years of continuous full-time employment in the same job or occupation.  However, lenders review CHFA loan applications on a case-by-case basis and consider many factors when assessing a prospective borrower’s credit-worthiness.