Homebuyers in Connecticut, when seeking out a mortgage, have national and local government programs to choose from. Local government home loans include CHFA, HERO, and UR Home mortgages.
Content: Nationally, government loans, such as FHA, VA, and USDA mortgages, are an option for borrowers looking to own a home. Such programs, while qualifications vary, offer borrowers such assets like lower down payments and less strict requirements, including lower credit. The U.S. Federal government insures and issues such programs.
State governments additionally back loans, and in Connecticut, the Connecticut Housing Finance Authority (CHFA) is responsible for such programs.
CHFA loans, an option for first-time homebuyers and those purchased properties in targeted areas, are characterized by below-market interest rates, and lower down payments, particularly when compared to conventional mortgages, are an additional benefit. Nevertheless, those applying for CHFA loans must be aware of income limits, which vary by area, and sales prices.
Although this Connecticut mortgage expands the options of homeownership, borrowers can only use it to purchase certain types of properties, which must be used year-round: single-family, townhouse, planned unit developments, new homes meeting FHA energy-efficient standards, FHA-approved condominiums, two- to four-family homes, and FHA-approved mobile homes. Properties must not be used for recreation, investment, vacation, rental, or commercial purposes.
Connecticut borrowers interested in this mortgage must prepare to have federal mortgage insurance. Specifically, a CHFA loan can be insured through the Federal Housing Administration, Veterans Administration, or USDA Rural Development. However, if a borrower decides to make a 15-percent down payment or is purchasing a home in a federally-targeted area that exceeds FHA loan limits, he or she has the option of private mortgage insurance instead. The insurance requirement is waived if the borrower makes a 20-percent or greater down payment on a newly-constructed home in a federally-targeted area.
Borrowers unable to cover upfront expenses have the option of the Downpayment Assistance Program (DAP).
Stemming off from CHFA are programs HERO and UR Home, both geared toward neighborhood stabilization in Connecticut. HERO, or the Homeowner's Equity Recovery Opportunity Loan Program, is designed for first-time and previous homebuyers and, like CHFA loans, offers competitive, below-market interest. Income and price have no limits, unless DAP is used.
An option statewide, HERO can go toward a similar assortment of properties, just as long as they are foreclosed, bank-owned, or abandoned and the borrower plans to live there. Additionally, cooperatives, unfinished homes, and properties not fully demolished do not fall under HERO's requirements.
As HERO-qualifying properties may require repairs, this mortgage can be combined with a 203(k) loan. The two mortgages cannot go above the applicable loan-to-value ratio and HUD Maximum Mortgage Limits.
UR Home, or the Urban Rehabilitation Homeownership Program, has a similar goal as HERO, but borrowers can only purchase properties in and be employees of companies located in Bridgeport, New Haven, Hartford, Waterbury, New London, and parts of Windham. This program combines a standard purchasing mortgage for a Connecticut property at a low interest rate with a no-interest home improvement loan, which is available on a first-come, first-serve basis and allots $20,000 for repairs to a single-family home and $25,000 for a multi-family property. Like HERO, UR Home is specifically for a property an owner plans to reside in and has no income limits.
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