Suppose you’re a first time home buyer in Connecticut. In that case, there are many options open to you (link to the top 10 places to live in CT blog here), ranging from beautiful waterfront homes in Mystic to bucolic countryside retreats in Ridgefield and cool urban lofts in Hartford. Being centrally located between New York City and Boston, it’s true that real estate in Connecticut can be on the pricier side. And, with the way mortgage rates and prices have risen in recent years, being a first time home buyer in Connecticut still might feel like an uphill battle to you. But don’t despair – Connecticut first-time home buyer programs are available to help put home within reach.
Due to the many Connecticut first time home buyer programs that are available, price doesn’t have to be an obstacle to owning a home. The Connecticut Housing Finance Authority (CHFA) has special, inexpensive mortgage programs for first time buyers so that you can get help bridging the gap between your savings and your down payment needs.
Let’s first take a look at the primary Connecticut first time home buyer programs offered by the CHFA that can help you get into your new home. Then we’ll explore down payment assistance that may be available to you.
HFA Advantage and HFA Preferred Loan Programs
These Connecticut first time home buyer programs are popular because they are specifically designed to help acquire a mortgage loan with a below-market interest rate and to save on insurance costs.
Other benefits of these programs include upfront mortgage insurance costs and mortgage insurance premiums ending when you reach 20% equity in your home. And, as a participant in these programs, you will have lower monthly mortgage insurance costs than a conventional home buyer.
The eligibility requirements for the Advantage and Preferred Loan Programs are:
- You must be a first-time homebuyer or have not owned a home in the past three years.
- The home must be your primary residence.
- The home’s sales price must be within the CHFA Sales Price Limits.
- Your qualifying gross income cannot exceed the CHFA-established eligibility income limits based on household size.
- You will be required to attend a free Homebuyer Education class before closing. The class will help you understand the home-buying process and offer tips for maintaining your new home. Classes are held online and at locations across Connecticut.
- In rare cases, you could be required to pay a Federal Recapture Tax if you sell your home within the first nine years, and earn a profit and your income exceeds the designated Federal Recapture Tax Income at the time of sale. Should you fall into this category, you may be eligible for reimbursement by CHFA for the taxes paid.
There are a number of eligible property types:
- Single-family homes, Townhouses
- Fannie Mae or Freddie Mac-eligible Condominiums
- Planned Unit Developments (PUDs)
- Two-to-four unit homes
- Investment or vacation properties are not allowed
Homebuyer Mortgage Program
This CHFA program is designed to put home ownership within reach of first time buyers and low- and moderate-income individuals and families by offering low-interest rate loans. Besides a lower-than-market interest rate, this program also offers down payment assistance to qualified buyers.
The eligibility requirements are similar to the Advantage and Preferred Loan Programs:
- You must be a first-time homebuyer or have not owned a home in the past three years unless the home you’re purchasing is in a targeted area.
- The home must be your primary residence.
- Investment or vacation properties are not allowed.
- The home’s sales price must be within the CHFA Sales Price Limits, and your gross income must be within the CHFA Income Limits. The CHFA Resource Map can tell if you are within program eligibility limits.
- You will be required to attend a free Homebuyer Education class before closing. The class will help you understand the home-buying process and offer tips for maintaining your new home. Classes are held online and at locations across Connecticut.
- In rare cases, you could be required to pay a Federal Recapture Tax if you sell your home within the first nine years, and earn a profit and your income exceeds the designated Federal Recapture Tax Income at the time of sale. Should you fall into this category, you may be eligible for reimbursement by CHFA for the taxes paid.
The eligible property types are the same as the Advantage and Preferred Loan Programs listed above.
The CHFA also offers special first time home owner programs for veterans and members of the military, teachers, police officers, and residents of public housing.
Now, let’s look at your options for down payment assistance available to first time home buyers in Connecticut.
Down Payment Assistance
The CHFA understands that saving enough money for a down payment can be the primary obstacle to homeownership for many first time home buyers. If you have the monthly income to pay mortgage payments but not enough to pay the upfront costs, you may qualify for a low-interest loan to help cover the down payment and closing costs. Borrowers can finance the down payment and closing costs with a Down Payment Assistance Program (DAP) Loan.
A DAP Loan can provide home purchase assistance up to $20,000 to help with down payment and closing costs. Your DAP loan must be at least $3,000 but no more than the minimum down payment required for your home, usually between 3% and 3.50%.
To qualify for a DAP Loan, you must first apply and qualify for a CHFA mortgage from a CHFA-Participating Lender and be able to demonstrate your ability to repay both your first mortgage and the DAP loan.
In Connecticut, there is also down payment assistance available through the Housing Development Fund, Inc. (HDF). HDF can help make buying your first home affordable with their first time home buyer down payment assistance programs. Like the CHFA, the HDF also has eligibility requirements to qualify for assistance.
If qualified, HDF offers first time buyers two primary down payment assistance programs:
- SmartMove CT offers low-interest down payment assistance for CT first time homebuyers for up to 25% of the purchase price when used for a down payment and qualified closing costs.
- Live Where You Work CT provides up to $20,000 in 0% down payment assistance for first time homebuyers purchasing homes in the city where they work.
In Summary
There are a number of Connecticut first time home buyer programs available, so it’s important to do your research and find the best program for you. Working with a real estate agent, like Spectrum Real Estate Consultants, who is familiar with these programs, can help make the process easier and less stressful for you.
The Spectrum Real Estate Consultants Team is the top producing team of Realtors at Keller Williams Realty Leading Edge. Our mission is to provide our clients with world-class service while simplifying the Real Estate transaction through experience, technology, and effective communication.
Our team members are licensed, live in, and serve their local communities throughout Connecticut, Rhode Island, and Massachusetts, so we truly understand the process, challenges, and benefits of real estate ownership in your community. Let’s connect if you’re ready to explore Connecticut first time home buyer programs further and start searching for your first CT home!