Owning a home is a dream for many, but the initial costs can be a significant hurdle. Recognizing this challenge, especially for first-time homebuyers, CHFA has introduced the Down Payment Assistance Program (DAP) LoanShare. This program is tailored to help individuals overcome the obstacle of gathering a substantial down payment.
What is the DAP LoanShare Program? The CHFA has identified that while many prospective homeowners have the monthly income to manage mortgage payments, they may not possess the initial funds required for the down payment. DAP LoanShare seeks to bridge this gap by offering low-interest loans that can be utilized to cover the down payment as well as closing costs. Essentially, the DAP loan acts as a second mortgage on the property.
Key Benefits of the DAP LoanShare Program:
Financing for Initial Costs: Borrowers have the option to finance their down payment and closing costs.
Home Purchase Assistance: The program provides assistance up to $20,000 for the home purchase.
Attractive Interest Rates: For reservations made between April 30, 2021, and December 31, 2023, borrowers can avail a low-interest second mortgage at rates ranging between 1.00% to 1.50% APR.
Are You Eligible? Before you get your hopes up, it's essential to understand the eligibility criteria:
Application with a CHFA-Participating Lender: One must first apply and qualify for a CHFA mortgage from a CHFA-Participating Lender.
Demonstrate Repayment Capacity: The borrower must exhibit the ability to repay both the primary CHFA mortgage and the DAP loan.
Things to Keep in Mind:
Loan Limits: The DAP loan you secure should be a minimum of $3,000. However, it cannot exceed the down payment amount needed for your home, which typically ranges between 3% to 3.50%.
Homebuyer Education Class: Before the deal closes, all borrowers must attend a free Homebuyer Education class. This class is designed to help individuals understand the nuances of the home-buying process and provide insights into maintaining a home. You can attend these classes online or at several locations across Connecticut.
Additional Assistance: Beyond CHFA's DAP, there are more resources available to potential homebuyers. Many cities and towns offer down payment assistance in the form of low-interest loans or grants. Always remember to check with your local Department of Economic and Community Development. Furthermore, some employers extend grants or loans for home buying, so a visit to your benefits office could also be beneficial.
The DAP LoanShare Program by CHFA is a significant step in making homeownership accessible to many who have been constrained by the initial costs. By offering a low-interest second mortgage, CHFA is ensuring that more individuals can fulfill their dream of having a place they can call their own.
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