Updated: Jun 7
Most Americans strive to buy their own house at some point. For generations, it has been the American Dream. But with real estate prices near all time highs and mortgage rates much higher than they were just a year or two ago, this dream has faded for too many.
Combined with high student loan debt balances, millennials are among the most impacted by these dueling crises. Luckily for prospective buyers in Connecticut, there are a few different programs designed to help spur first time homeownership, offered through an organization known as the Connecticut Housing Finance Authority (CHFA).
These programs are:
Conventional Area Median Income Loan Program (CALP)
Fannie Mae's HFA Advantage and Freddie Mac's HFA Advantage programs
Other CHFA programs for certain career types
Related: First-Time Home Buying 101
First-time homebuyer programs in Connecticut
The bulk of this article will explore these programs one by one. If you live in Connecticut but still have too much student loan debt to buy a home, check out our guide to student loan forgiveness for Connecticut residents first.
1. Conventional Area Median Income Loan Program
CHFA's Conventional AMI Loan Program is designed to help prospective homeowners that don't qualify for HFA Advantage programs to get loans, so long as the reason for HFA denial is having an income too high to qualify.
The program provides loan assistance to first-time buyers in Connecticut that earn greater than 80% of their area's median income. The benefits to the program are numerous and include:
No upfront private mortgage insurance fees
Lower PMI costs on an ongoing basis
Automatic PMI cancellation upon reaching 20% equity
Also, this CHFA program may come with a 0.25% interest rate reduction if the home you are purchasing is located in a federally targeted area. The qualifications for the program are fairly simple as well.
To start off, you must be a first-time homeowner, or at least have not owned a property in the previous three years (36 months). Additionally, the home must be used as your primary residence and cannot be outside of the confines of CHFA's established home purchase price guidelines, which are updated periodically. And finally, that income requirement we already covered.
Many properties are eligible for the program, including single-family homes, townhouses, some condominiums, planned unit developments, and two-to-four unit homes.
2. Fannie Mae's HFA Advantage and Freddie Mac's HFA Advantage programs
Fannie Mae and Freddie Mac, government created mortgage entities, both offer HFA Advantage programs for prospective Connecticut buyers. They are mortgage loans that carry low down payments and are offered by CHFA. The programs come with three major perks:
Low interest rates (below prevailing market conditions)
Low PMI costs (only applicable if putting down less than 20%)
Zero mortgage costs to get your loan
Of course, there are qualification criteria that you'll need to meet in order to take advantage of the program. CHFA establishes income and home price limits that vary by Connecticut city and town, and you must be within those guidelines in order to qualify. Additionally, you'll need to:
Be purchasing your first home (or not been a homeowner in the previous three years)
The home must be your primary residence
Must be a home for a single family, or be a condo, townhouse, PUD, or two-to-four unit home
If you meet all of these qualifications, you'll need to complete a homeownership education course.
You can find CHFA income and home purchase price guidelines here.
3. Other CHFA programs for certain career types
The Connecticut Housing Finance Authority also has numerous other programs available to Connecticut residents working in certain fields. Please keep reading for a full list of these programs, and note that many of these programs do require you to meet home purchase price and income thresholds.
Home of Your Own - Those with disabilities or those that will be living with a disabled family member may qualify for a home loan at an interest rate below the going market value at the time. You'll need to provide documentation of the disability and meet CHFA set income and home price limits to qualify.
Military Homeownership Program - Connecticut based veterans, military members, and spouses that are looking to purchase their first home may qualify for CHFA's military homeownership program, which awards those that qualify with a 0.125% interest rate deduction off their mortgage.
Mobile Manufactured Home Loan Program - This program is for those looking to purchase a mobile home, and is unique in that it is offered to all homebuyers, regardless of whether you have owned a home previously. You'll need to come up with a 20% down payment, but if you do, you'll become eligible to take advantage of reduce closing costs and an interest rate. You may be subject to income limits if you buy outside of a designated "Target Area," but regardless, your home must be on a permanent foundation without wheels.
Police Homeownership Program - Police officers looking to buy their first home can receive a 0.125% interest rate deduction off their home loan if buying a home in a participating municipality. If you are a member of the state police, this statue does not apply to you, so long as you buy within the state of Connecticut.
Public Housing Residents Program - Current house renters and those in rental assistance programs may be able to secure lower interest rate mortgages in Connecticut if they are able to meet CHFA's guidelines for credit, employment, and income.
Teachers Mortgage Assistance Program - Teachers in Connecticut are also eligible to receive a 0.125% interest rate deduction off their first mortgage through CHFA, with the exception of minority teachers, who may receive 0.25%. To be eligible, teachers need to be employed in "priority school districts," subject shortage areas, or "alliance districts," of which you can find more information here. Minority teachers that attended HBCUs or Hispanic focused schools may be eligible for more benefits!
Remember - all of the programs listed here are sponsored by CHFA.
Connecticut first-time homebuying tips
Of course, many borrowers will not qualify for any of the programs that we've discussed here. And that is completely okay. But for those Connecticuters that must buy a home in a more conventional way, it is important to be aware of the following tips.
1. Save your down payment in a separate account
Saving up your down payment will be one of the most important aspects of the home buying process. Depending on your loan type, you will likely want to save between 10%-20% of the purchase price of your home to be used as a down payment, though federally backed FHA loans may only require 3.5%, depending on your credit score.
2. Don't forget to account for closing costs
Let's face it - paying closing costs and title fees is not anybody's idea of fun, but it is integral to fulfilling your dream of homeownership. In Connecticut, you can expect closing costs to be about 2-4% of the purchase price of the home, depending on many variables, including:
The location and property taxes of the home you purchase
When in the month you close on your home
When in the year your closing occurs
Connecticut does have some of the highest closing costs in the country, in large part due to it's high property taxes.
First-time home buyer programs in nearby states
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