Connecticut Housing Finance Authority (CHFA) Program Changes On 11/25/13

Connecticut Housing Finance Authority (CHFA) Program Changes On 11/25/13.  The Connecticut Housing Finance Authority (CHFA) is Connecticut’s Premier Mortgage Loan Program for “First Time Homebuyers”.  CHFA is a Quasi Government Agency that provides a 30-year, fixed rate Mortgage Program, with an interest rate below comparable market rates.  CHFA also provides Downpayment and Closing Cost Assistance (DAP) for First Time Homebuyers who meet the qualifications for the DAP Program.

CHFA Mortgages are available to Homebuyers who have not had an ownership interest in a property for the previous 3 years. Prior Homeowners may qualify for a CHFA mortgage if the home they purchase is within an area that is designated as a “Targeted Area”.   All Homebuyers must meet "Income Limits" which are established by CHFA based on “Household Size”. There are also “Sales Price Limits" on CHFA Mortgages which also vary by town.

As of Monday, November 25, 2013, CHFA will be implementing MAJOR changes to both the CHFA Mortgage Program and DAP Loan Program.  Below is a recap of the changes to the CHFA Mortgage Program and DAP changes on Monday, November 25, 2013 are:

CHFA Mortgage Program Changes 11/25/13:

• Presently CHFA Income Limits are based on Total Household Income.  On 11/25/13 CHFA will base Income Limits only on the income of the Borrowers applying for the Mortgage.
• Lenders will not be required to document or verify the income of any other person (dependent, relative or other) that will occupy the property at any time after closing, if the person is not an applicant for the mortgage loan.
• Even though CHFA Income Limits will be based only on the income of the Borrower and/or Co-Borrower applying for the Mortgage, family size Income Limits (1 or 2 persons; 3 or more) will still be determined by the number of Household Members, and will determine the amount of income the borrower and/or co-borrowers may earn.
• Rental Income from 2-4 Unit Properties will now be calculated based on the percentage of the anticipated fair market rent.
• Rental Income from 2-4 Unit Properties will no longer be calculated on 100% of the fair market income from the total rental units in determining income limits for the Borrower and/or Co-Borrowers.
• Rate Lock Period for CHFA Mortgages are being reduced from 120 days to 90 days.

CHFA DAP Loan Program Changes 11/25/13:

• The amount of liquid assets borrowers will be allowed to keep will increase from $5,000 to $10,000
• Presently Borrowers are only allowed to keep $10,000 of all the combined funds they have in all retirement programs including IRA's, and 401K's.  As of 11/25/13 Borrowers will be allowed to keep 100% of all retirement funds.
• Retirement funds may be used for reserves if reserves are required.
• Income Tax refunds will not be included in the $10,000 income limit Borrowers are allowed to retain of personal liquid assets.
• Rate Lock Period for DAP Loans are being reduced from 120 days to 90 days.

This concludes the Connecticut Housing Finance Authority (CHFA) Program Changes On 11/25/13.  Below is a brief summary of the basic qualifying Guidelines for CHFA Mortgages and DAP Loans which will continue to apply:

• $3,000 Minimum Loan Amount
• Owner Occupied Co-Borrowers are allowed, but No Co-signers
• 35/45 Debt-To-Income Ratios
• 33/43 Debt-To-Income Ratios for DAP Loans
  
• Maximum 60 Hours per week, per Borrower can be used towards usable qualifying income (overtime and/or second job)
• DAP Class required for Downpayment & Closing Cost Loans, but only 1 Borrower need attend
• All Judgments have to be paid
• All Collections have to be paid, except Medical Collections 
• Bankruptcies MUST have been discharged a minimum of 2 years
• Bankruptcies MUST have been discharged a minimum of 5 years for DAP Loans
• Income Limits  (See New Income Limit chart). 
• Sales Price Limits (See New Sales Price Limit Chart)
  

Even though CHFA is a Loan Program specific to Connecticut, other States also have similar First Time Homebuyer Programs, and may also be adopting similar changes as the ones I will list above.  So anyone reading this blog and is located in another State, you should contact your State Housing Finance Authority to see if they are considering implementing similar changes to the ones the Connecticut Housing Finance Authority (CHFA) Program will implement on 11/25/13.