First-Time Home Buyers In Connecticut: Programs, Grants And Other Resources

If you want to plant your roots where you can enjoy all four seasons oceanside, look no further than the East Coast’s best kept coastal secret, the state of Connecticut. The state’s natural beauty, architecture and rich history are the perfect backdrop to good New England living.

If your heart is set on buying a house in Connecticut, read on to learn about grants and programs for first-time home buyers moving to CT.

What Is The Connecticut Housing Finance Authority (CHFA)?

The Connecticut Housing Finance Authority (CHFA) is the state of Connecticut’s housing finance agency (HFA). The CHFA was started in 1969 to help low to moderate income individuals and families gain access to affordable housing.

The CHFA offers special grant and loan programs that help renters move responsibly into homeownership. The home loans offered through the CHFA have below market or competitive interest rates for first-time home buyers. For borrowers who may need financial assistance with their down payment or closing costs, the CHFA offers a Down Payment Assistance Program (DAP) as well.

First-Time Home Buyer Programs In CT

First-time home buyers have access to grants and loans that can help lift the financial burden of buying a home. First-time home buyer assistance programs can help borrowers with closing costs, tax credits, and the education they may need to get started on their home purchase journey. Below are a few of those programs.

HFA Advantage Mortgage Program

The Freddie Mac HFA Advantage mortgage loan offers maximum financing when purchasing your first home with below market-interest rates and no upfront mortgage costs. The HFA Advantage mortgage program combines affordability and flexibility only available through housing finance agencies like the CHFA. To qualify for this loan, the borrower’s income and the home sale price cannot exceed the CHFA’s income and purchase price limits.

Additional requirements:

• Must be a first-time home buyer (having not owned a home in the last 3 years)
• Home must be the borrower’s primary residence
• Sale price must be within the CHFA sales price limits
• Borrower must complete an approved home buyer education course

Eligible Property Types:

• One-unit primary residence
• Condominiums
• Planned unit developments (PUDs)
• Manufactured homes that are described as CHOICEHomes

HFA Preferred Mortgage Program

Fannie Mae offers the HFA Preferred mortgage loan that is very similar to the Freddie Mac HFA Advantage mortgage loan. Both loans feature competitive interest rates and lower mortgage insurance costs. But the HFA Preferred loan will allow a borrower to buy a 2- to 4-unit home if they plan to live in one of the units. To qualify for this loan the borrower’s income and the home’s sale price cannot exceed the CHFA’s income and purchase price limits.

Additional requirements:

• Must be a first-time home buyer (having not owned a home in the last 3 years)
• Home must be the borrower’s primary residence
• Sale price must be within the CHFA sales price limits
• Borrower must complete an approved home buyer education course

Eligible Property Types:

• One-unit primary residence
• Condominiums
• Planned unit developments (PUDs)
• Manufactured homes that are described as CHOICEHomes
• 2- to 4-unit homes (if the borrower occupies one of the units)

Homebuyer Mortgage Program

Depending on a borrower’s financial situation, they could be eligible for up to $3,000 of down payment and closing cost assistance with the Homebuyer Mortgage Program. Borrowers do not need to be a first-time home buyer to qualify for low interest rate loans and services with the Homebuyer Mortgage Program. The Homebuyer Mortgage program is available to previous homeowners seeking to purchase a home in a designated federal revitalization area. To qualify for this loan the borrower’s income and the home sale price cannot exceed the CHFA’s income and purchase price limits.

Down Payment Assistance Program (DAP)

Down payment assistance is also available for borrowers who need financial assistance with closing costs or the mortgage down payment. Borrowers can qualify for a low-interest Down Payment Assistance Program (DAP) loan, also commonly referred to as a silent second mortgage. Borrowers can finance their down payment and closing costs with a DAP second mortgage up to $20,000. The DAP loan must be at least $3,000, but no more than the minimum down payment required for the home they intend to purchase.

First-Time Home Buyer Grants In CT

The CHFA does not currently offer a traditional grant for first-time home buyers. However, for a limited time, the CHFA is offering forgivable mortgage loans. Forgivable mortgage loans are second mortgages that a borrower will not have to pay back as long as they stay in the home they purchased for a set number of years.

The Time To Own – Forgivable Down Payment Assistance loan is administered by the CHFA on behalf of the Connecticut Department of Housing. The Time To Own loan is only available to eligible applicants that qualify for and receive a CHFA first mortgage and have been a resident of Connecticut for the last 3 years.

House hunters who are not first-time home buyers can also take advantage of this forgivable loan opportunity. Borrowers may not own any other property at the time of the CHFA mortgage closing and the property being purchased must be located in a designated revitalization area.

The Time To Own loan has a 0% interest rate and doesn’t require a monthly payment. Funds can be used to finance up to 20% of a down payment and up to 5% of closing costs. 10% of the principal balance will be forgiven annually until the loan is fully forgiven on the tenth anniversary of the date of closing. Learn more about additional eligibility requirements and considerations online.

Additional Resources For Connecticut First-Time Home Buyers

For many, buying a home might seem like an overwhelming endeavor, but it doesn’t have to be. Buying a home can be a fun and exciting process if you’re well prepared. Below are a few resources that will help you build the confidence and knowledge you need to land your dream home in Connecticut.

Home Buyer Education

Some of the loans mentioned previously require borrowers to attend a pre-purchase home buyer education course or workshop. A first-time home buyer education course walks a potential home buyer through the process of purchasing a home and what it takes to maintain one.

Some of the topics covered during these workshops:

• Understanding credit scores and how they work
• Budgeting and money management
• Determining the type of home the borrower can afford
• Comparing loan and lender types
• Discuss programs and loan products that assist first-time home buyers

Home buyer education workshops are offered both in-person and online, often for free. Because this class is sometimes required to qualify for certain loans and assistance programs, it is a good idea to make sure the class fulfills the requirement for the program you intend to work with. To find a HUD-approved housing counselor, visit the CHFA website for a list of CHFA Participating HUD-Approved Counseling agencies throughout the state of Connecticut.

Federal Programs

In addition to state-specific assistance, there are federal-level programs that are available nationwide. These aren’t considered first-time home buyer programs, but if the borrower qualifies, they can be incredibly helpful in the home purchase process. The following are two of those programs and how they work.

Good Neighbor Next Door

The Good Neighbor Next Door program is available to law enforcement officers, firefighters, emergency medical technicians and teachers (pre-K through 12^th grade). Those who qualify can get a 50% discount on a home in an area designated for revitalization. The borrower must agree to live in the home for at least 3 years.

If the borrower does not occupy the home for 3 years, HUD requires them to pay back the full amount of the home instead of the discounted price. This is enforced with a silent second mortgage that requires no payment and has 0% interest. The goal is to boost the economic development of the revitalization area and help those who help us.

VA Grants For Service-Connected Disabilities

To help disabled veterans adjust to civilian life and make the best possible adaptations for the future, the Department of Veterans Affairs makes several grants available each year for the construction or modification of homes to better support the needs of veterans. Unlike loans, these are grants not meant to be paid back.

For borrowers with a service-connected disability, the VA has a few options to help them into a home that is specially adapted so they can comfortably live independently or with their family. Depending on the level of need and the type of home the borrower prefers, funds can be used to construct, purchase or remodel the home they intend to purchase.

There are a few grants to choose from with very specific eligibility requirements, so it’s important for borrowers to pay close attention to the details and deadlines available online to ensure they receive the maximum benefit available to them. In addition to these grants, qualifying veterans who receive VA disability income as a result of a service-connected disability can have their mortgage funding fee waived, which lowers their loan costs significantly.

The Bottom Line

Before you sign on the dotted line for a new home, take some time to do your research on ways to save in the home buying process. By simply being a first-time home buyer, borrowers can qualify for grants and low-interest loans to cover upfront expenses, closing costs and even a down payment.

If you’re ready to wake up to a fresh breeze from the Long Island Sound, get approved with Rocket Mortgage® and start your home search today!