Changes for CHFA Loans

 In Different Types of Loans, First-Time Home Buyers

The Colorado Housing and Finance Authority (CHFA), which runs the most popular Colorado down payment assistance program, is making some big changes to their loans.  For new loans locked on or after April 1, 2019, the amount that they will give borrowers as a grant, and the amount they will lend borrowers as a second mortgage, are both changing.  

Here is all the information you need to know.

How CHFA Loans Currently Work

Currently, CHFA offers two options for down payment assistance.  You can either get a grant for 4% of the loan amount to pay for the down payment and closing costs, or you can get an interest-free, no-payment second mortgage for 5% of the loan amount to pay for the down payment and closing costs.  

That’s going to change for any loan locked on or after April 1, 2019.

How CHFA Loans are Going to Work

Effective April 1, the grant amount is decreasing from 4% to 3%, and the second mortgage amount is decreasing from 5% to 4%.

What does this mean for you?

There is a 3.5% down payment requirement if you get an FHA loan from CHFA.  With the new 3% grant, you won’t have enough to cover all of the down payment.  If you get the 4% second mortgage, you will have enough for the down payment and a little bit left to pay for some of the closing costs.

There is only a 3% down payment requirement if you get a conventional loan from CHFA.  If you get the 3% grant, you will have enough money to cover just about all of the down payment (remember, the grant is for 3% of the first loan amount, not 3% of the purchase price, so you will be a little bit short of covering all of the down payment).  With the 4% second mortgage, you will have enough to cover all of the down payment, with a little bit left over to pay for some of the closing costs.

The Bottom Line

CHFA loans are still the best option for home buyers who need down payment assistance.  Rates are low (and do not depend on credit scores) and mortgage insurance is lower than it is for other types of loans.  After April 1, CHFA loans will not be as good as they were in the past, but they are still a very good option for home buyers who need down payment assistance.

We have great software that shows you how much each option will cost, how much of your own money you will need, and how much your savings will be with each option.  

Contact us today to get more information and to get pre-approved to buy a home with no money down.

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