Thursday, November 12, 2015

First Time Homebuyer? Try Your State Housing Authority

One of the best kept secrets about mortgages is the great deals that home buyers—especially first time home buyers—can get on a mortgage from their state housing finance authority. In fact, according to a national survey last year by NeighborWorks America 70% of U.S. adults are unaware of down-payment assistance programs available for middle-income homebuyers in their community.

State housing finance authorities are state-chartered organizations established to help meet the affordable housing needs of their residents. Most housing finance authorities (or HFAs) are independent entities that operate under the direction of a board of directors appointed by each state’s governor.

There are more than 2,400 programs available across the country from state HFAs. For qualifying buyers, they offer first and second mortgages at below market rates, down payment and closing cost assistance, grants and credits to help with monthly mortgage payments, homeownership education and more.

Borrowers with debt payments that are too high to qualify for a conventional loan may be more successful with an HFA loan. Like FHAs, HFAs are exempt from the new ability-to-pay rule that took effect last year, known as the QM Rule.

The programs available through HFAs vary from state to state.  For a directory, you can go to

In Connecticut, for instance, HFA loans are underwritten by approved lenders. If you live in Connecticut (where, incidentally, Total Mortgage is a participating lender) you should contact your loan officer to learn more about the 38 programs available to home buyers and homeowners from the Connecticut Housing Finance Authority. These include:

The Homebuyer Mortgage Program. 

This is for first-time homebuyers (who have never purchased a home or had an ownership interest in a residence in the past three years) who meet minimum credit, income, and employment standards.

CHFA sets income limits for every town in the state based on local income levels and household size. See CHFA income limits to find out if you qualify.

 Down Payment Assistance.

CHFA also offers loans up to $3000 for first-time buyer who have difficulties raising the cash for down payments and closing costs.

Targeted Areas.

The Connecticut Housing Finance Authority (CHFA) suspends many of its mortgage eligibility rules for homes purchased in areas of the state targeted for revitalization. These “targeted areas” have been recognized by the federal government as likely to benefit from an increase in homeownership.

The cities of Bridgeport, Hartford (except for Census Tract 5245.02), New Haven (except for Census Tract 3614.02), New London, and Waterbury have been designated as targeted areas. Also, portions of Ansonia, Danbury, Groton, Meriden, Middletown, New Britain, Norwalk, Norwich, Stamford, Torrington and Windham have been designated as targeted areas.

Other Programs for Buyers and Owners.

CHFA also offers its residents:
  • Mortgage programs for military, police, and teachers
  • Homeowner’s Equity Recovery Opportunity (HERO) Loan Program for buying and rehabbing distressed properties
  • FHA rehab programs
  • HFA Preferred Loan Program for first-time home buyers who qualify for low cost mortgage insurance coverage
  • Homeownership Mortgage Program for eligible tenants of publicly assisted housing
  • Home Of Your Own Mortgage Program (HOYO) for disabled residents
  • Mobile/Manufactured Home Mortgage Program for those purchasing a mobile manufactured home in a state-licensed mobile home park.
 Don’t Forget to Stay Educated

It’s important for new buyers to seek homeownership education. It’s often a requirement for down payment programs and it gives buyers confidence with the home buying process, financing options, including down payment programs, and budgeting.

Take a moment to find out what’s available to you. Don’t assume you won’t qualify. Millions in mortgage and down payment assistance is available through state HFAs every year.