In the state of Connecticut, like so many other places around the country, it is a buyer’s market for real estate. For first time home buyers in Connecticut there's such a glut of existing homes for sale that it may be difficult to choose between all of them in your price range. Fortunately, there are plenty of first time home buyer programs to help you with down payment assistance, closing cost assistance, and low interest mortgages. There are programs available at the state level as well as the local level, and even some of the larger cities. The best place to find the information about the programs is to consult a real estate agent or mortgage broker.
Connecticut Housing Finance Authority (CHFA)
CHFA is a quasi-public corporation founded in 1969 by the Connecticut state legislature in order to expand affordable housing opportunities for low and moderate income families and individuals. In its 42 years of existence CHFA has provided assistance to more than 122,000 first-time home buyers by providing more than $11 billion in low-interest loans and other financial help. For first-time home buyers CHFA works in partnership with HUD to provide the necessary financial assistance. Currently the agency has three different programs that new home buyers can choose from.
1. Downpayment Assistance Program (DAP)
The down payment assistance program is a low interest loan for the purpose of providing the financial means for a downpayment and closing costs. It is not a grant in the state of Connecticut like it is in some other states, and in almost every case the interest rate paid on the DAP is the same rate charged on the mortgage itself. In order to qualify for the DAP first time home buyers must also qualify for the CHFA mortgage loan and must attend a new home owners course. Qualified borrowers can receive as much as $3,000 from this DAP loan.
2. Homebuyer Mortgage Program
The home buyer mortgage program is Connecticut's low interest home loan vehicle designed for low income individuals and families. CHFA takes the applications and reviews them for approval before a loan is approved. Applicants must meet minimum income and eligibility requirements, demonstrate employment, and have a fairly good credit. Most often these low-interest loans are given to first time home buyers, but the state does allow them to be given to repeat buyers if they agree to purchase a home in one of Connecticut's targeted revitalization areas. The low-cost loans offered through this program are 30 year, fixed-rate mortgages.
3. Pilot Downpayment Assistance/Closing Cost Program for Manchester
This particular program is a brand-new one offered by CHFA for first time buyers whose income is not more than 80% of the adjusted median income for the Manchester area. Other restrictions and adjustments may apply according to HUD guidelines. Like the previous programs, this new program provides assistance through low interest loans and downpayment assistance. The program is designed to encourage homeownership in the Manchester area.
CHFA provides additional programs which can be utilized by first-time and repeat home buyers based on various circumstances. The agency does not write the loans or service them personally; instead, the loans are offered through licensed and approved banks and lending institutions.
Local Programs
There are a handful of local programs in Connecticut targeted at various cities. For example, the city of Hartford has access to two programs: the Hartford Home Ownership Appraisal Gap Financing Program and the Hartford House Hartford Down Payment and Closing Cost Assistance Program. There are also local programs for Manchester, New Haven, and Windsor. These local programs will have their own requirements which will most likely include minimum and maximum income, occupancy restrictions, and possibly others.
Other First Time Buyer Programs
In some cases it is possible to find first time home buyer grants and other programs made available by nonprofit organizations. Some of these organizations ceased providing assistance in late 2007 and 2008 after the rules for FHA mortgages were altered by the government. However, there are still some that exist to help first time home buyers with down payment and closing costs.
Furthermore, some major cities provide buyer programs as a means of getting abandoned properties off the books and into the hands of new owners. Just be aware that these types of programs almost always come with strings attached, such as occupancy restrictions that may require you to live in the house for 10 years or more.
Finally, if you read on various Internet sites or hear radio or television commercials claiming that the federal government provides free housing grants, don't believe a word of it. It is simply not true. The federal government operates a website through which all grants are administered. And on that site, in large bold lettering, is a clear statement that the federal government does not provide housing grants, down payment assistance, or low-cost financing of any kind.