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Frequently Asked Questions by Lenders

The Connecticut Housing Finance Authority (CHFA) has compiled the following FAQs to provide basic information to CHFA-approved or prospective Participating Lenders who are interested in learning about CHFA mortgage programs and procedures.  


How will CHFA loans benefit my client-borrowers?  

CHFA offers safe 30-year fixed-rate mortgages at affordable, or below-market, interest rates.  CHFA also provides second mortgages to help pay for down payment and closing costs.  Finally, CHFA offers free homebuyer education classes and financial counseling to CHFA borrowers to guide them through the home-buying process.  


How do I qualify as a “Participating Lender” of CHFA programs?

In general, institutions eligible for CHFA-Participating Lender status must have an actual “bricks and mortar” office in Connecticut.  They must also demonstrate that they have a tangible net worth of at least $1,000,000 (or an acceptable line of credit to this amount); they are Federal Deposit Insurance Corporation (FDIC) - or Federal Savings and Loan Insurance Corporation (FSLIC) - insured or have at least 12 months of experience making mortgage loans on homes in Connecticut; they have a sufficient number of trained personnel to originate and close mortgage loans; they maintain quality control systems and they comply with any relevant state and/or federal laws, regulations and licensing requirements.

Please note: An institution seeking approval as a CHFA loan servicing company must only demonstrate that it has a proven ability to service loans like the kind for which it seeks approval and does not need FHA or VA approval.

Criteria sheets are also available for your information.  (See, Section 2 Lender Guide and form, Participating Lender- Criteria.)  


How do I qualify as a “Correspondent Lender” of CHFA programs?  

In general, institutions eligible for CHFA-Correspondent Lender status are required to submit evidence to CHFA that demonstrates that they meet the same criteria as a Participating Lender, with the exception that they do not need FHA or VA approval and may have a tangible net worth of at least $50,000.  In addition, an institution seeking approval as a Correspondent Lender must submit a letter from a sponsoring, CHFA-approved Participating Lender with a tangible net worth of at least $1,000,000.

Criteria sheets are also available for your information.  (See, Section 2 Lender Guide and form, Participating Lender- Criteria.)  


How do I become a CHFA Participating Lender?  

The CHFA Lender-Approval process requires a prospective CHFA lender/ servicing company to submit documentation to CHFA that establishes its qualifications based on the criteria identified above.   Specifically, the prospective CHFA lender must submit a letter describing its organizational structure, the location of its offices and the credentials of its key personnel to CHFA.  It must also submit copies of approval letters from the FHA and the VA, (if it seeks approval to originate and close these type of loans), a copy of its most recent audited financial statements as well as a copy of its quality control plan.  Finally, it must include three professional references from other banks, mortgage companies or Housing Authorities that attest to the institution’s experience in and capacity to service home loans.  

To complete the approval process, an institution is also required to attend CHFA lender training and to sign a Participating Lender Agreement and/or a Servicing Agreement.   Once approved, lenders are placed in the CHFA vendor system which enables them, among other things, to register for loans and reserve funds on-line.    


Does CHFA provide training classes for lenders?  

Yes. CHFA provides training for the sales origination staff of newly CHFA-approved Participating Lenders once each month.  Please contact CHFA’s Single Family Underwriting Department for further information on dates and times.  

(See, Lender Calendar.)    


How does CHFA compensate lenders for the loans?  

Lenders that originate and close CHFA home loans earn up to a 1% origination fee of the amount of the mortgage.  Lenders that service CHFA loans earn 0.375 % every year, computed each month on the unpaid principal balance.    


Who is eligible for a CHFA loan?

Generally, CHFA endeavors to assist new homebuyers to purchase 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 the 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 mortgagor(s) 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.  Homes purchased with CHFA loans must be the buyer’s year-round primary residence.   

(See, Section 3 Lender Guide.)  


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 might also apply to homes eligible for CHFA mortgages.  

(See, Section 3 Lender Guide.)  


Can a homebuyer obtain a loan to pay for down payment and closing costs?  

Borrowers that qualify for a CHFA first mortgage and lack sufficient funds to cover the down payment or closing costs may apply for a second mortgage of at least $3,000 under CHFA’s Downpayment Assistance Program.     

(See, Section 8 Lender Guide and Downpayment Assistance Program.)    


What’s the most a borrower 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 eligible CHFA borrowers. However, there are no income limits if a homebuyer purchases a home in a targeted area, unless the borrower is applying for downpayment assistance.

(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.  

(See, Section 3 Lender Guide.)  


Is there a sales price limit on homes financed with CHFA mortgages?  

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.  

(See, section 3.1 Lender Guide.)  


Does CHFA require a home inspection?

No, CHFA does not require a home inspection prior to a CHFA loan approval.  However, we encourage homebuyers to arrange 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 their contract with the seller.  


Does CHFA require a home appraisal?  

Yes. A property eligible for a CHFA loan must be appraised, and if needed, repaired to comply with relevant building codes and insurer guidelines. 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.   

(See, Appraisal Completion and section 3.2 Lender Guide.)  


Do all CHFA loans have to be insured?

Yes, under most CHFA loan programs federal mortgage insurance is required.  The mortgage must be insured either through the FHA, the VA, or the RD.  Loans under the HFA Preferred Loan Program are insured by Fannie Mae.

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

(See, Section 5.1 Lender Guide.)  


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.  In most circumstances, no down payment is required for a VA or RD guaranteed mortgage.   HFA Preferred Loans are insured by Fannie Mae.


Does CHFA require borrowers to attend homebuyer classes?

Yes, all 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.)  CHFA offers these courses each month at various locations throughout the state at no cost to homebuyers.  A lender must provide loan reservation numbers to borrowers under mortgage program.  

(See, Homebuyer Education schedule of classes.)  


Does a condominium qualify for CHFA financing?  

Yes, 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 meet Fannie Mae eligibility criteria if coming through the HFA Preferred Loan Program,  or an uninsured loan with 20% down. (See, Section 3.2, F.  Lender Guide.)  


What is the Federal 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.  A Participating Lender is responsible for informing CHFA borrower-clients about this tax and providing them with specific related documentation at the time of application and at loan closing. (See, Federal Recapture Tax Disclosures, Notice to Mortgagor – Potential Tax, Understanding Tax,  and Method to Compute.)  Homeowners may be eligible to receive reimbursement from CHFA if required to make Federal Recapture Tax payment.

(See, CHFA Operating Manual Section 2 - Program Information)  


Are co-signers allowed on CHFA loans?

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.  

(See, Section 5.1 Lender Guide.)  


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

CHFA does not require borrowers to meet a minimum credit score. However, applications that require mortgage insurance will be subject to the qualifying guidelines of the insurer which may include a minimum credit score.  

(See, Section 5.1 Lender Guide.)  


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.   Please note that an applicant that has filed for bankruptcy in the past may still qualify for a CHFA loan so long as five (5) years have elapsed since his or her debts were discharged, and credit has been re-established.  

(See, Section 5.1 Lender Guide and News and Announcements.)  


What are the requirements for Hazard Insurance?  

Homes financed by CHFA mortgages must be insured against fire and other reasonable hazards. The amount of coverage must cover the outstanding principal balance of the loan and must be at least what the mortgage insurer or guarantor requires.  Lenders are required to ensure that additional coverage is provided if a home is vulnerable to hazards not covered by the initial policy and must notify CHFA when this is the case.    

(See, Section 6.3 Lender Guide for more specific information.)  


Are there standard documents that must be submitted with each loan application?  

Yes, lenders are required to submit standard documentation in a specific sequence that verifies the eligibility of the property to be mortgaged, the eligibility of the applicant and that meet other insurance and/or guarantor requirements.  In addition to this standard documentation, specialized forms may be required in connection with specific loan programs.   

(See, form Processing Checklist and Section 5.5 Lender Guide.)    


How do I reserve loan funds?  

CHFA-approved lenders are provided with an ID and a secure password which enables them to register loans and reserve funds through CHFA’s On-line Loan Reservation System.  


How long does a loan reservation last?  

All CHFA reservations expire after 90 days from the date of the loan reservation.  After 90 days, outstanding loan reservations will be automatically canceled from the system.  CHFA also automatically cancels all outstanding loan Commitments that have not been closed by the expiration date on the Commitment Letter.

(See, News and Announcements.)  


When do the loan rates change?  

Loan rates change on Tuesdays and Fridays at noon.  

(See, Interest Rates.)  


How do I change a loan after funds have been reserved?  

Only CHFA staff has the authority and capacity to make a change to a loan that has been reserved and will only do so if the change is found to be appropriate and acceptable.  

A lender who wishes to make a change on a loan that has been reserved should contact the Single Family Underwriting Department:



How do I check the status of a loan?  

A Participating Lender’s authorized staff may check the status of a loan by accessing CHFA’s Online Reservation System.  Once in the system, the lender is able to check the status of a loan by its CHFA Loan Number and discover whether a loan reservation has been accepted and whether a Commitment has been issued.  


Can I get an extension on a loan reservation or Commitment?  

All CHFA reservations expire after 90 days from the date of the loan reservation and will automatically be canceled from the system.  However, lenders may request a loan extension under mitigating circumstances by contacting the Single Family Underwriting Department.   Lenders must request an extension via email at least 7 days prior to the automatic loan cancellation date.

(See, News and Announcements, October 29, 2008.)      


Where do I send my closed loans?  

Lenders should send their closed, service-released loans (except for DAP loans) as follows:

Submission of Loan Documentation - Government Insured Loans

  1. Receipt of loan files in order of the Loan Delivery Checklist will initiate setup of the loan on Idaho Housing and Finance Association’s servicing system to begin servicing of the loan. 

    The originating Participating Lender must submit closed loan files to:

    Idaho Housing and Finance Association
    565 W. Myrtle Street
    Boise,  ID  83702
  2.  Inquiries may be directed to:

    Idaho Housing and Finance Association  Toll Free Phone : #1-800-219-2285   -or-  “Lender Connection” portal @ -or-   Email:  

Submission of Loan Documentation - Conventional, Non-Government Insured Loans

  1. CHFA will purchase loans released for servicing to AmeriNat pursuant to Section 7.2.A. of this Manual. Participating Lenders, releasing servicing to AmeriNat, will deliver to AmeriNat within ten (10) days after purchase all those loan documents pursuant to the Conventional Loan Delivery Checklist issued with the loan commitment.
    The originating Participating Lender must submit closed loan files to:

    ATTN: Wanda Attig
    217 South Newton Avenue
    Albert Lea, MN 56007
    Toll Free Phone:  # 1 (888) 263-7628     Fax: (562) 745-1281



Where do I send my closed Downpayment Assistance Program loans?  

Lenders should fax or deliver their closed Downpayment Assistance Program loans and related documentation to Capital For Change, Inc. (C4C) within 24 hours of the loan closing.  

Capital For Change, Inc. (C4C)
ATTN: Angela Zielke
121 Tremont Street Hartford, CT  06105
Phone:   (860) 233-5165 ext. 2041
Fax:       (860) 920-2041

(See, DAP – Closing Procedures (C4C) for further information.)    


How do I file an application for a Real Estate Escrow Deposit Account?

All banks are required to complete a "Real Estate Escrow Deposit Account Application" for each account that is opened.  You may request an application form by contacting the CHFA Finance Department at (860) 571-4332.

Please remember to send a copy of the completed application to:

CHFA Attention: Finance Department
999 West Street
Rocky Hill, CT 06067


Who do I contact if I have questions?

For further information, please contact CHFA’s Single Family Underwriting Department.

Phone:     (860) 571-3502
Fax:(860) 571-3550

Mailing Address:
Attn: Single Family Underwriting
999 West Street
Rocky Hill, CT 06067-4005