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

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Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

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.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator 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, #Moodus, #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 NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Maria Gilda Racelis 11/24/2013 12:11 AM
Topic:
Mortgage / Finance
Location:
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Groups:
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chfa loan program changes

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland
only on the income of the Borrowers applying for the Mortgage.
 
THAT'S A BIGGIE!!
 
I've always believed and still do believe that these programs are designed to exclude and not include. 

The rules for waiting after bankruptcies are still ridiculous and doesn't reflect any real risk assessment, merely an institutional prejudice against bankruptcy, probably going back to the Puritans.  Can anyone explain the logic of those exclusions?  Seems to me that a person discharged by bankruptcy is a far better risk than someone loaded with debt.
 
Nov 23, 2013 06:53 PM #1
Rainmaker
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Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
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Great job updating all of us with these changes. It is a great product for the right borrower and so many have been fortunate to have this loan product available otherwise they could not acquire a home.

Nov 23, 2013 06:59 PM #2
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

George, Those look like improvements to me. That should help some families get into homes that couldn't before. Have a good Sunday.

Nov 23, 2013 09:54 PM #3
Rainmaker
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, will have to check with my lender to see if these changes are for Colorado too.   I would imagine this is a Federal change?

Nov 23, 2013 10:02 PM #4
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lenn that one is a biggie as the asset change.  The one change they did not make is in the way income for a borrower is calculated.  They will use all income a borrower is making(overtime, bonus, 2nd job they have not had for two years) and use it towards the income limits, but it is unlikely they will allow that income to be use towards the DTI.  As far as the bankruptcy goes, just about every borrower I have seen with a bankruptcy has taken almost 2 years to get their credit back in shape so to me 2 years is reasonable, but to make them wait longer if they have repaired their credit is unreasonable.

Joe yep it is a good program and with these changes more people should be able to take advantage of the DAP program.

Debbie they are major improvement and will help several families.

Joan, these were local changes, but they were only able to make them most likely because of changes to Federal Guidelines to make them possible.  I would hope that other States are thinking of making similar changes if they have not done so already.

Nov 23, 2013 10:30 PM #5
Rainmaker
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Bill and MaryAnn Wagner
Wagner Real Estate Group - Ocean City, NJ
Jersey Shore and South Jersey Real Estate

George,

This looks like a very liberal program with very helpful ratios. 

Nov 23, 2013 11:17 PM #6
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Julie Dumaine-Russell
RE/MAX Alliance - Branford, CT

George - Thanks so much for providing these updates to the CHFA/DAP program.  Hoping that these improvements will open the door for more buyers to take advantage of.

Nov 24, 2013 12:12 AM #7
Rainmaker
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Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Hi George: Thanks for the update. Quick question: the dti 33/45, is that 33-45 percent of the income?

thanks.

Nov 24, 2013 12:24 AM #8
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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, this is a great change. I had heard this from the woman that sat next to me at the luncheon. Making home affordable for first time buyers just got easier

Nov 24, 2013 12:47 AM #9
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Bill they have not been very liberal in the past, and the only ones with tighter DTI Ratios than them is USDA, but they are losing up on the way they calculate income limits and assets.

Donna this should open things up to several more Buyers.

Maria yes.  The 33/43 if the Borrower is also applying for a DAP Loan is 33% of the income for the housing ratio (PITI as a % of income) and 43 total debt to income ratio.  The 35/45 is if there is NO DAP and again the 35% is the housing ratio, and the 45% the total debt to income ratio.

Ed you sat next to Mary Jane and she heads up the DAP Classes for CHFA.

Nov 24, 2013 04:53 AM #10
Rainmaker
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Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

George, this is definitely a boost for the first time home buyer who typically needs help the most.  I think the guidlines are more than fair.

Nov 24, 2013 06:13 AM #11
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Nick I think so too and these are changes that should have been made a long time ago.

Nov 24, 2013 07:07 AM #12
Rainmaker
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Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

George, those are some major changes. There are so many changes in our collective industries.  Knowing programs and keeping up with their changes is crucial to serving clients.  It seems like these are long overdue changes.  

Nov 24, 2013 09:32 AM #13
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Kathleen you are correct these are long over due.  If these changes had happened earlier we might have sold a few more houses here in Connecticut, but I guess it is better latte than never.

Nov 24, 2013 10:46 AM #14
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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

George, great news for all CT potential buyers looking to use this program...it will be much better and perhaps open it up to more people going forward.

Nov 24, 2013 11:08 AM #15
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Ginny these changes should do what you stated, and hopefully help to reduce some of the housing inventory around here.

Nov 25, 2013 07:02 AM #16
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