The Connecticut Housing Finance Authority/Rural Development USDA Mortgage is a combination of both a Connecticut Housing Finance Authority (CHFA) Mortgage and a Rural Development USDA Mortgage. What that means is that this Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut – CHFA/USDA is funded by CHFA, but insured by USDA. As a result this Loan Program has to meet the stricter of the two Loan Program Guidelines except for Downpayment and Monthly Mortgage Insurance (PMI).
Presently the basic CHFA Loan Program requires a 3.5% Downpayment because the basic Loan Program is FHA insured. CHFA does allow the Borrower to borrow the Downpayment under a separate second loan (DAP) making it a 100% financed Mortgage, on the other hand USDA does not require any Downpayment. Likewise the basic CHFA Mortgage which is FHA insured requires the Borrower to pay FHA Insurance (similar to PMI), but USDA does not require PMI on their Mortgages. Since the CHFA/USDA Loan Program is USDA insured, their Guidelines over rides the stricter CHFA/FHA Guidelines in both cases, making the USDA Loan Program a true 100% financed Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut and with no PMI. These are the only exceptions, in all other instances the stricter Guideline will be the one that will apply.
Some of the basic differences between CHFA and USDA Mortgages and that the stricter Guideline applies are:
CHFA Mortgages are available in all Connecticut City and Towns, USDA Mortgages are only available in the Cities and Towns on this “Map”. CHFA is for First Time Homebuyers, USDA is for all Homebuyers. CHFA has Sales Price Limits, USDA does not. Both Loan Programs have Income Limits. CHFA has higher Income Limits for households of up to three people, but USDA has higher Income Limits for households of four or more people. USDA allows the Upfront Funding Fee to be included in the Mortgage, CHFA does not because CHFA will not go beyond 100% Loan-To-Value on the first loan. If the Borrower needs to borrow the Upfront Funding Fee, they can do it on a second (DAP) loan, and also include the Closing Costs if they qualify. Also CHFA allows for higher Debt-To-Income Ratio’s then USDA.
Both CHFA and USDA are great Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, and the combination of these two Loan Programs make them even better in many cases.
Properties that are eligible for CHFA/USDA Mortgages are:
CHFA/USDA requires an FHA Appraisal, so FHA appraisal rules apply. However, FHA appraisal requirements have been relaxed, so many of the things that use to create a problem no longer apply like:
If you are a First Time Homebuyer in Connecticut and are purchasing a house in one of eligible USDA Cities or Towns, a CHFA/USDA Mortgage maybe the perfect Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, for you.
I have provided two links blew if you are interested in reading more detailed information on CHFA/FHA or USDA Mortgages.
Connecticut Housing Finance Authority (CHFA) Mortgages
Rural Development USDA Mortgage
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
Connecticut Housing Finance Authority CHFA announced this past month that The Treasury Department has awarded them $34 million in American Recovery and Reinvestment Act (ARRA) funds which will provide affordable housing, and is expected to help create jobs in Connecticut. The funds will be used to rehabilitate and develop 184 affordable housing units throughout the state. It is also expected that these funds will help to create an estimated 800 jobs.
The $34 million is part of a “federal efforts to stimulate the economy by providing grants in exchange for federal tax credits. The funds are available to developments have received low-income housing tax credits in 2007, 2008 or 2009.”
CHFA will administrator these federal funds known as Low-Income Housing Tax Credit (LIHTC) program. What usually happens is that developments receive these Low-Income Housing Tax Credit would sell the credits in order to raise money which then makes it possible for them to keep the Housing Development affordable.. However, with the state of the economy the way it is many developments were unable to sell their credits at a price that would make it financially feasibility for them
The $34 million will make it possible for four developments that received tax credits in 2008 in Manchester, Westport, Hamden and Norwich to exchange their tax credits for grant funds to be invested in affordable housing. These four developments represent 184 affordable housing units that will cost $63 million, and create the estimated 800 jobs
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
When considering Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, VA and CHFA/VA Mortgages should be at the top of the list for Veterans. But unfortunately many Veterans do not take advantage of these Loan Products here in Connecticut. Therefore there is a need for us to make more of an effort to inform our Veterans of this valuable benefit that is available to them.
VA or CHFA/VA Mortgages are just what the name implies, these Loan Programs are meant for and only available for our Veterans. The only differences between a VA and CHFA/VA Mortgage is that VA Mortgages are funded by Lenders and Insured by VA. CHFA/VA Mortgages are Funded by CHFA at a below market interest rate, but Insured by VA. A Veteran can purchase a house with a VA Mortgage up to four times. CHFA/VA Mortgages are only for Veterans who are purchasing a house for the first time. VA Mortgages do not require any Downpayment, but the Veteran still has to come up with the Closing Costs, whether from his/her own money or Seller Paid Cost. CHFA/VA can be 100% Financed though a second loan (DAP). CHFA/VA Mortgages must also meet the Income and Property Limits that apply to all CHFA Loans.
Just like with the other Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, VA & CHFA/VA have requirements that have to be meant in order to qualify. Some of them are obvious, and some of them not so obvious.
Those who are eligible:
VA and CHFA/VA Mortgages are not available to Veterans who intend on purchasing a property with a Co-Borrower that they are not married to, unless the Co-Borrower is also a qualified Veteran.
VA and CHFA/VA Mortgages are such a huge benefit for our Veterans who are especially looking for Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, because of the following.
VA Mortgage benefits for a Veteran:
Just like not all Borrowers are not able to do Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, neither are all properties eligible for Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, and VA and CHFA/VA Mortgages are not an exception to this rule. VA and CHFA/VA Mortgages are only eligible for properties that Veterans are going to purchase as their primary residence, and they are limited to 1-4 Units Properties, and VA Approved Condos and PUDs.
The only exceptions to the primary occupancy rule is if the Veteran is on active duty, his or her spouse may occupy the property, therefore, certifying occupancy. Also in the case of single or married service members deployed from their permanent duty station, they are considered to be in a temporary duty status and are able to certify intent to occupy. In that case there is no need to have a spouse certify occupancy.
All of the Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut presently are all government insured Loan Programs, and as a result all these programs have an Upfront Funding Fee. On VA and CHFA/VA Mortgages the Upfront Funding Fee varies depending on the number of times the Veteran has used this Benefit. On a VA Mortgage the Upfront Fee can be rolled into the Loan, but on a CHFA/VA Mortgage the Upfront Fee cannot. If a Veteran does not have the money to pay the Upfront Fee on a CHFA/VA Mortgage, they can either have it included in Seller Paid Closing Costs, or borrow the Upfront Fee as part of a Downpayment and Closing Cost Assistance Loan (DAP). There exceptions to the Upfront Closing Fee.
A Veteran may be exempt from paying the VA Funding Fee for the following:
In Conclusion Just as in the case with our other Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, VA & CHFA VA try to take steps to insure that our Veterans don’t get themselves over their head financially. The qualifying Debt-To-Income Ratio’s are much stricter for this 100% Finance Loan Program, and VA further requires that a worksheet be done to show that the Veteran will have residual income once the Mortgage is approved.
If you did not have the opportunity to have read my previous blog on Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut, CHFA/FHA Mortgages, please follow the link.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
Before I get into the first Loan Program in this series, I need to further clarify the intent of this series “Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut”. This series is not intended to break down each of the Loan Programs, and to technically explain each one. While a little bit of that will be done, the main content of each blog will focus on who they are intended for, and what are the qualifications that a Borrower needs to meet, in order to qualify for each of these programs. For a more technical explanation of each Mortgage Program, I will either link to a previous blog that I have written on that Mortgage Program, or directly link to that Loan Program website it self. Having said that let’s start with the first one, Connecticut Housing Finance Authority (CHFA) Mortgages.
Connecticut Housing Finance Authority (CHFA) is the number one “Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut”. CHFA Mortgages are funded through Tax Exempt Bonds, and insured (backed) by FHA, VA, or USDA, however, most CHFA Mortgages are FHA insured. Because CHFA Mortgages are funded directly by CHFA, but insured by FHA, VA, or USDA they have overlapping guidelines that Borrower need to meet in order to qualify for these Mortgages, and I will give examples of this shortly.
CHFA is mainly intended for “First Time Homebuyers”. A “First Time Homebuyer” by definition is someone who has not owned a property in the last three years. Which means that you can have owned a house in the past, but as long as 3 years have passed since you last owned it (this applies to both selling the house or it having been foreclosed), then you are a “First Time Homeowner” again. Now I said that is the main intent, because there is an exception to this rule. If a house happens to be located in a town/city or area that CHFA has listed as a “Targeted Area”, then the Borrower does not have to meet the definition of a “First Time Homebuyer”, as long as the house that they are buying is the only house that they will own.
CHFA Mortgages are only for Borrowers who will occupy the property, they are not available for Non-Owner Occupied (Investment) Properties, and at no time can a Borrower purchase another property while they have a CHFA Mortgage, if they do CHFA will call the loan. That means that CHFA will require the remaining amount still owed on the Mortgage to be paid off in full. For example, a “First Time Homebuyer” purchases a house with a CHFA Mortgage. As time goes by they start to make more money and the family starts to grow, so they decide that it is time to purchase a bigger house. They do not have any intent on keeping both houses, and have two mortgages, so they put the house on the market. However, no one seems to be very interested in their house and they are not seeing much activity. In the mean time they find a house that they fall in love with and want to purchase it, but they can’t, because they have not sold their present house. CHFA will not let them purchase the new house while they still have a mortgage with CHFA, and the Lender is required to notify CHFA of the new loan. The Lender cannot claim that they did not know that the Borrower had a CHFA Mortgage, because one of the documents that the Borrower will have to provide to the Lender is documentation on the present mortgage. The only way around this would be for the Borrower to refinance the CHFA Mortgage into a new Loan Program.
Having said that CHFA is an excellent "Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut", because the disadvantages are few, but the advantages are many. Without getting into a lot of detail (I will provide a link at the end of this blog to one of my blogs on CHFA that will give more detail) CHFA only requires a Borrower to have a 3.5% Downpayment, and if they do not have the 3.5%, they can either get the whole amount from a qualified Gift Source, or borrow the full amount on a second loan (DAP) from CHFA. This second loan is at the same Interest Rate as the first loan, and all Closing Costs can be included in the second loan as well. The main stipulation to this second loan is that the Borrower has to have less than $5,000, including 401K’s or other retirement accounts. If they have more than $5,000 than they will be required to use any amount over the $5,000 towards the 3.5% Downpayment/Closing Cost, and then they can borrow the balance as long as the second loan will be more than $3,000.
Since CHFA Mortgages are funded and subsidized through Tax Exempt Bonds, CHFA Interest Rates are below the Market Rate of other Loan Programs. This makes CHFA Mortgages very attractive to Borrowers, because they will have lower monthly payments, which allows them to keep more of their own money.
CHFA Mortgages do have "Income and Property Price Limits". These limits can change from town/city to town/city, so you always need to check what the Income and Property Price Limits are for the town/city you want to purchase in.
Low or no Downpayment Mortgage Programs have undeservingly gotten negative publicity in recent years because of so many people losing their homes. The feeling by some is that because people bought houses with little or no money down that they are now upside down on their mortgages because of it. That might be, but that is not the reason why they are losing their home, the reason why they are losing their homes is because they bought a house that was more expensive than they could really afford. If anything mortgage that require little or no money down made it possible for Homebuyers to keep more of their money for those rainy days.
"Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut", have much stricter qualifying guidelines than do other programs to try to keep Homeowners from losing their homes. If you remember at the beginning of this blog I mentioned that mortgages funded by CHFA, but insured by FHA, VA, or USDA have overlapping guidelines that Borrower need to meet in order to qualify. When the guidelines overlap, it is the stricter of the two guidelines that will apply. For Example, Borrowers with good credit scores can qualify for a FHA Loan with a Total –Debt-To-Income-Ratio of up to 57%, however, if a Borrower is applying for a CHFA/FHA Mortgage and has Total –Debt-To-Income-Ratio of more than 45% they will not qualify. And if they are applying for a DAP Loan along with that first mortgage, they will not be able to exceed a Total –Debt-To-Income-Ratio of more than 41%. The same is true for CHFA Mortgages that are insured by VA or USDA, the stricter guideline will apply. CHFA goes over and above most programs to try to insure that Borrowers do not over extend themselves.
One more thing before I rap up here. Lenders and Brokers in Connecticut that cannot do CHFA Mortgages will try to scare Borrowers by telling them that CHFA Mortgages have a Recapture Tax if they sell the house within the first 9 years. This is true, but what they don’t tell them is that in order for the Recapture Tax to apply, they will also have to make a Capital Gain on the sale of the house, and their Income will have to be over the Recapture Tax Income Limit for that particular year. At McCue Mortgage we have been doing and servicing CHFA Mortgages for over 30 years, and we can remember that last time someone had to pay the Recapture Tax.
If you would like more detail information on CHFA "Mortgages /Loan Programs with Low or No Downpayment Still Available In Connecticut" please check out these blogs that I have previously written.
CHFA Not For Just First Time Homebuyers.
New Tax Credit .................... Connecticut Housing Finace Authority (CHFA)
CHFA ................ Federal Recapture Tax
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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McCue Mortgage is a Connecticut based Mortgage Co., that specializes in first time homebuyers. However, we are equipped to service all homebuyer with many loan programs such as FHA, VA, & CHFA.
I am available 7 days a week, and can be contacted on my cell phone (860) 573-1308 until 10:00 PM. My primary focus is to serve you.
I specialize in first time Homebuyer Loans like CHFA, and no money down programs. I also enjoy helping people repair their credit, and helping them purchase a home.
Thanks George – McCue certainly makes it easy! I have to tell you at this point that my experience with McCue Mortgage has been the very best experience ever (and I’ve bought and sold 4 homes)! I will recommend McCue highly to everyone I talk with who’s thinking of buying a home and looking for a mortgage...Pat Anderson, Program Assistant II, University of Connecticut
I just wanted to say thank you again. The refinance went incredibly smooth, not a single glitch! I received the check from the lawyer yesterday and I will be on the way to being free from credit card debt. I will be sure to send anyone I know your way if they need any home financing expertise...Regards, Lou Moffa, Middletown, CT.
Thanks for all your help. I'm passing your name along to my (new) boyfriend as he is looking for a condo or house within the next 6 months! You have been a tremendous resource and help to me with this whole process and I'm sure Chris will need your guidance as well.....Pam Neumann, Portland, CT.
I have a closing coming up next Tuesday, a short few days away. I have someone from our Activerain family to thank for this, our own George Souto from McCue Mortgage took a bad situation and made it all better! I can't thank George enough, and if I am lucky I will get to meet him at the closing! My clients found out the day after their offer had been accepted that the bonus the wife just got put them over the allowed earning limit for the program we were using. That was on a Friday afternoon. By Monday, we were back on target, and with no hitches in our git along, George pulled the deal together with a USDA Rural Development Loan. The rates my clients got made my jaw drop, lower than I have seen ever, they were more than pleased too. It was UNDER 5%! After my clients met with George they called me and told me just how wonderful he had been to them. They couldn't say enough good things about George, and were over the top impressed. Me too actually. This is my first time having a client use a USDA loan, I am very excited. I will be informing all my first time home buyers this is one loan to check out for sure. Kudos to George Souto! From the bottom of my heart, thank you. And I really hope that you make it to the closing! You are "da bomb"!
Andrea Swiedler, Realtor with Prudential Adams & Associates, New Milford, CT
I found George through Activerain, sent my clients to him, and we closed the deal today. As we were all at the closing table my clients turned to me with that first time home buyers star dust in their eyes look and said that George was "totally awesome"! George, if I didn't say enough about you the other day in the first post, I want to say it now. Thank you, you really rock! And our clients think so too.
Andrea Swiedler, Realtor with Prudential Adams & Associates, New Milford, CT
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Get Pre-Approved Today.
This is a great time to purchase a house, the prices and interest rates low and Sellers are motivated to sell. So whether you are a First Time Homebuyers or have bought several homes in the past, you still need to get Pre-Approved for a loan first to determine what price range you are qualified to purchase in.
A Realtor will most likely not take you to see a house unless they know that you are qualified to purchase a house in that price range. So it is important to get Pre-Approved as early as possible so that neither you or the Realtor are wasting yourr time looking at houses that you can not qualify for a mortgage on.
It is not only important that you get Pre-Approved before you start to look at houses, but it is equally important that you contact a Loan Officer that will take the time to go through all the steps that are needed to Pre-Approve you. Once you have contacted a Loan Officer, that mortgage professional needs to go through the following steps
They need to first identifying your ability to purchase a home, so that they can establish the Purchase Price Limit that you qualifies for. In order to do this a Loan Officer is going to have to check your Credit, take a full Loan Application, and submit the Credit and Loan Application through their Automated Underwriting System. It is important that they take all three of these steps, because it is the ONLY way that you can be reasonably assured that you will qualify for a Loan. Once the Credit Report is pulled it will provide the Loan Officer with all of your revolving debt, which will have to be taken into consideration in determining what you can afford. The Credit Report will also show your payment history, and Credit Scores. The Loan Application will include your Income, Residency, Employment, and Bank Information. Once all this information has been submitted, the Automated Underwriting System will determine if you are qualified to purchase a house within your desired price range.
Once this has been done, the Loan Officer can provide you with a Pre-Approval Letter for you to provide to a Realtor. If you are not working with a Realtor, the Loan Officer will be able to provide you with a list of “Trusted Professional Realtors” that the Loan Officer works with for you to choose from.
This Pre-Approval process should not be confused with the Mortgage Commitment that you will have to obtain once you have found a house. A Mortgage Commitment can only be given once there is a Sales Contract on a property, and documentation has been collected to verify the information that you gave to the Loan Officer. Also at this time a Property Appraisal will be done to determine if the property is worth the price that you have agreed to pay. You need to make sure that you are working with a Loan Officer that will take the time to go through everything that I mentioned above. If a Loan Officer does not do that, then you needs to contact one that will. In my opinion if a Loan Officer does not all this, then all that the Buyer will have is a Loan Officer’s guess, and not a very good one at that.
Seasoned Money ............ What Is It???
The term "Seasoning Money" or Seasoned Money" is a very common term in the Mortgage Industry. A simple definition for what is "Seasoned Money" is that it is a reference to the length of time that has past since funds were deposited in or withdrawn from a Bank Account..
Why is "Seasoned Money" important in the Mortgage Industry? It is important because when you apply for a mortgage, the Lender is going to require that you produce bank statements for a certain period of time. These days any deposit or withdrawal of funds of $1000 or more, that are not a normal monthly deposit or withdrawal will need to be explained.
This is not a problem if you can document where the funds came from. For example you sold a car and can produce a sales slip and copy of the check, or you cashed in some stocks or bonds and can produce the documentation for that. But most often Borrowers can not produce documentation for these deposits or withdrawals, and stating that you just had it laying around the house is not a good explanation (that is referred to as mattress money).
So what needs to take place if there is a large deposit or withdrawal it needs to be "seasoned" (be in your Account long enough so that it does not show up as a deposit or withdrawal on the Bank Statements that you need to produce.
Depending on the Loan Program, the length of time to "season" the funds is different. For example, on Conventional Loans (Fannie Mae, & Freddie Mac backed loan) the time needed to "season" is 31 days, because all that is required for you to produce is a 30 day bank statement. Therefore, if the funds have been in the bank account for more that 30 days they will be included in the balance, but not listed in the deposits or withdrawals. For a FHA Loan, the Underwriter (at least my Underwrite) is going to want to see two months of bank statements, which means that the money needs to be "seasoned" for at least 61 days. On a CHFA Loan, the Underwriter as well as CHFA usually want to see three months of bank statements so the money needs to be "seasoned" for at least 92 days, since within a three month period there is bound to be a 31 day month.
This all may sound simple, but "seasoning money" produces more problems than you might imagine. A lot of the times it is because the Borrower got money to purchase the house from someone that would not be an acceptable source for gift money. Or the person was an acceptable source, but does not want to produce the documents needed to show that it was an acceptable gift.
Please keep in mind that if you are thinking of purchasing a house and are going to be depositing or withdrawing any large sum of money ($1000 or more) that you talk to your Loan Officer first to make sure that it is being done correctly so that you do not run into a problem at the time of the loan.
Connecticut FHA, CHFA, VA, and USDA Mortgages
These days here in Connecticut as well as in many other states FHA Mortgages have become the main Loan product. Not long ago Conventional Mortgages were the loans of preference, but with all the changes brought about by Fannie Mae, and Freddie Mac, Conventional Mortgages have become costly and difficult to do.
During this time I have written about these changes and how FHA in particularly has become the loan product of choice. These blogs are a little spread out so I thought that it was time to provide links to some of them so that they could be easily found.
Besides FHA, CHFA, VA and USDA Mortgages have also started to become more and more popular during this time. CHFA and USDA are proving to be a great loan for First Time Homebuyers, because 100% financing is available through them. But existing Homebuyers also have 100% financing available to them through VA Loans if they are a Veteran.
Below are links that provide details on all of these loan programs and their advantages. I hope that they prove to be of value to those looking for information on these loan products, and that the links serve as a good point of reference.
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FHA The Main Loan Program In Connecticut!!! 
New Tax Credit .................... Connecticut Housing Finace Authority (CHFA) 
