Homes for CT Loan Program

 

Under the “Homes for CT”Loan Program, owners and developers of new construction residential buildings can be eligible borrowers. The Connecticut Housing Finance Authority (CHFA) administers the program to assist eligible borrowers to obtain funding necessary for the construction of residential buildings.

CHFA can assist by guaranteeing for the benefit of the eligible financial institution the repayment of loans they make to eligible borrowers where the loans (1) may have loan to value ratios in excess of typical underwriting standards, and (2) satisfy any additional conditions and limitations.

Participation in the program is open until the total of all loans reported to CHFA reaches $100,000,000. Guarantee claims will be paid by the Comptroller of the State of Connecticut. The maximum aggregate of all guarantee claims is $10,000,000.

Those additional conditions and limitations include:

 

• Loan amounts for individual borrowers cannot exceed the applicable town’s sales price limit established by CHFA for CHFA first time homebuyers.


• The per dwelling loan amount to developers and builders cannot exceed the applicable town’s sales price limit established by CHFA for CHFA first time homebuyers.


• The maximum amount of any loan to an eligible borrower which is a developer or builder cannot exceed $10,000,000.


• The loan to value ratio based on the value of the constructed residential building(s) cannot and the amount of the loan from the eligible financial institution, when combined with any additional subordinate loan(s) provided by CHFA or other lenders, exceed one hundred percent.

 

Under the program, CHFA may also provide additional loans to eligible borrowers which are subordinate to the loans made by the eligible financial institutions.

Eligible borrowers must demonstrate to the satisfaction of the eligible financial institution that the proposed development of residential buildings meets standards established by CHFA, which are set forth below. They must also provide CHFA with a covenant that each dwelling unit, when offered for sale to the public, shall be sold only to individuals participating in a homebuyer loan program administered by CHFA.

Borrowers may only use the loan proceeds to pay for certain “eligible construction expenses”. Those expenses are limited to (A) expenses necessary to (i) complete the construction of a residential building, or (ii) construct improvements relating to a residential building, and (B) other expenses which CHFA determines to be necessary.

If approved, the loan to an eligible borrower from an eligible financial institution will bear interest at a rate that does not exceed an external rate published by the Federal Home Loan Bank of Boston. Participation by lenders is voluntary and lenders may limit loan approvals based on program availability and other factors.

Borrowers should consult with their legal advisors as to the borrowers’ rights and obligations under this program.

Within available resources provided by the State Bond Commission, CHFA may make the additional subordinate lien mortgage loans directly to eligible borrowers. Those loans are subject to such terms as CHFA may establish, including loan amounts, interest rates, and terms to maturity.

 

 

 

 

 

CHFA STANDARDS FOR RESIDENTIAL BUILDINGS

UNDER HOMES FOR CT PROGRAM

All eligible residential buildings shall be located in Connecticut, and when completed must be structurally and functionally sound, meet all applicable zoning, building, health, and similar codes and requirements.

Eligible buildings must also meet the requirements for owner-occupied loans insured or purchased by the Federal Housing Administration, Veterans Administration, Fannie Mae, and Freddie Mac.

The building when constructed must be readily accessible by roads or other legal access for ingress and egress that meet local standards, be served by utilities that meet community standards, and be suitable for year-round use and occupancy.

A building permit must be issued prior to the loan closing. The borrower must be required to obtain a permanent certificate of occupancy upon completion of construction.

An eligible building may be a building consisting of one to four family dwelling units or may contain multiple units in the case of a condominium or a planned unit development (other than a timeshare).

The land on which the eligible building is situated cannot exceed basic livability, other than incidentally, cannot be subdivided, and cannot provide a source of income (other than incidental income) to the owner-occupant.