CHFA Military Mortgage Option

The Connecticut Housing Finance Authority (CHFA) provides special homebuyer benefits to military families. These are offered to both those currently serving and veterans from all branches of military service, including the Guard and Reserve.

Features of CHFA Loans For Veterans And Military Members

CHFA loans aimed at veterans (and those not specifically for vets but where veterans are welcome to apply) include the following features:

• Below market interest rates
• Additional interest rate cuts for qualifying disabled veteran applicants
• Sales price caps
• Income limits
• Waivers for both sales and income caps in certain areas
• Down payment assistance is an option

For these loans, there is generally a first-time home buyer requirement, but it may be waived if the applicant is purchasing property in a targeted area.

What Is A Targeted Area?

CHFA literature describes homes for sale in targeted areas as follows:

“These are areas of the State that would benefit from increased homeownership,” and as such offer a waiver on first-time home buyer requirements that would otherwise be applicable for this type of mortgage. Income limits are also waived unless the applicant is applying for the loan and also needs down payment assistance.

Down Payment Assistance Loans

Those applying for a military-friendly loan via a participating lender who is part of the CHFA network may “automatically qualify” for a low-interest supplementary loan of at least $3,000 in FY 2020 (the amounts are always subject to change), meant to provide help with down payment expenses. This loan is defined as a “second mortgage,” and the borrower is required to prove they can afford both loans, but lack the savings for a required down payment.

Interest rates on these second mortgages are identical to the rate you are offered on the purchase loan.

The CHFA Military Mortgage Option

This is a CHFA loan advertised as primarily for first-time home buyers with qualifying military experience or qualifying family members.

This loan program offers an additional interest rate discount (an additional 0.125% off in FY 2020, as an example, but always subject to change) for veterans, currently serving military members, plus unmarried, surviving spouses or civil union partners of a veteran who died as a result of Military Service (or as a result of service-connected disabilities).

The requirements for this loan include being a first-time home buyer, or not having owned property in the last 3 years. For this type of loan, only primary residences are eligible. No investment properties, vacation homes, or properties that cannot be classified as real estate, such as RVs and houseboats.

Eligible properties for this type of veteran-friendly mortgage include:

• Single-family homes
• Townhouses
• Planned Unit Developments
• Condominiums (must be FHA/VA approved or eligible for Fannie Mae)
• Two-to-four unit homes that have been used as residences for the past five years
• Newly constructed two-family homes that meet the FHA energy efficiency standards

If you want to purchase one of the above properties but do not plan to be an owner/occupier, you will not qualify for these types of mortgages. Additional restrictions or property use may apply. Some mortgage programs do not allow the property secured by the loan to be used as an Airbnb, bed-and-breakfast, etc.

The Targeted Area Exception

As mentioned above, you do not have to be a first-time home buyer to purchase a property in a targeted area. Official sources state, “CHFA will waive the income limit for eligible applicants purchasing in Targeted Areas who are not applying for a Downpayment Assistance Program loan.”

Other Requirements

All users of this program must attend a free Homebuyer counseling course before the mortgage closing date. Mortgage insurance may be required unless you make a 20% down payment. CHFA does not process loan applications or lend money; you will need to apply through one of the program’s networked lenders. You can find a list of these lenders on the CHFA official site.

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