First time homebuyers could get a huge lift with help from the state. The new “Time to Own” program offers down payment and closing costs to people making certain incomes.
“We're trying to incentivize sustainable and long-term homeownership here,” said Nandini Natarajan, CEO of Connecticut Housing Finance Authority (CHFA), which is operating this pilot program with $20 million allocated for homebuyer assistance by the State Bond Commission.
“This becomes about creating an opportunity and having more purchasing power at a time when it's very competitive," Natarajan said.
If you’ve tried to bid on a home recently, you know this market is a beast, but state housing leaders like Natarajan hope the program will help first-time home buyers, or folks who haven’t owned a place in the past three years, be competitive by helping cover $25,000 to $50,000 in down payment and closing costs upfront with a forgivable loan.
Plus, housing leaders say it should help accepted applicants build equity instead of paying a landlord rent each month, rent priced similar to a mortgage.
“So, you get your equity, you can send your kids to college, and you enjoy the benefits of being a homeowner,” said Seila Mosquera-Bruno, commissioner for the state Department of Housing.
The Time to Own loan is structured as a ten-year, 0% ‘non-amortizing’ loan, essentially a lump sum loan, with one-tenth forgiveness each year.
To put it simply, if you sell the home after five years, you’ll owe back 50% of what was given to you up front.
Stay for ten years, you won’t owe a cent back.
“So, if they stay three years, you know, they want to leave the home or they have to leave the home. I mean, the rest of the loan that has not been forgiven would be due at the time,” Natarajan said.
“It's basically based on the length of your stay, so we want to ensure that the homebuyer is getting this home and raising their family and it's not just a flip, right? Because these are precious state resources, and we want to enable long term homeownership," Natarajan continued.
Homebuyers have to apply and fit the low and moderate-income requirements, and have lived in Connecticut for three years.
A borrower, who meets the eligibility requirements, may get assistance for up to $50,000 depending on the location they’re looking to buy, according to state leaders.
“It’s making sure that families have options, right? To go to those higher opportunities because you can get up to $50,000 for those communities that houses are a little more expensive,” Mosquera-Bruno said.
Mosquera-Bruno said this help can help people live the American dream.
People whose income exceeds 100% AMI are ineligible for assistance under Time to Own, explained a CHFA spokesperson Marcus Smith.
This chart lists income eligibility.
“The numbers refer to a percentage of the area median income, or ‘AMI,’ of the applicant. The amount of a loan the applicant is eligible to receive is determined, in part, by whether the applicant’s income is less than 80% AMI, or between 80 to 100% AMI,” explained Smith.
Smith said in the case of Fairfield County, the 80% AMI threshold is $108,720, and the 100% AMI threshold is $135,900.
The program is garnering a lot of attention on our website and social media pages, attracting hundreds of comments, shares and tags to friends looking to buy their first home.
Many comments online question the fairness of this program.
“Feel free to make one of my mortgage payments for me to reward me for paying my mortgage on time for the last 22 years," one person wrote.
Natarajan responded, “This is one tool that the state has at its disposal to bring homeownership and raise it for people who are struggling in the rental market today.”
Others write comments like, “It’s easy to buy a home with nothing down if you can’t keep up with maintenance and taxes.”
Mosquera-Bruno said part of the requirement to get the help is mandatory homeownership counseling.
Plus, lenders are responsible for making sure the buyers’ monthly payments are something they can afford.
“We underwrite loans to the highest possible standard. We have very responsible lending guidelines,” Natarajan explained.
She says they’re partnering with lenders CHFA has worked well with in the past.
“During the last financial crisis, Housing Finance Agency loans were not the loans that defaulted," Natarajan said.
How many applicants will get help? That’s to be determined.
Applications are now being accepted. The program launched Monday and already, associated mortgage lenders are learning there’s lots of interest.
“Our home office in West Hartford, they got 75 calls as of 12:30 this afternoon,” said Rose Mary Ruocco-Cyr, a First World Mortgage loan officer, Tuesday.
She said that doesn’t include calls coming into other branch locations, too.
“The market is a little bananas right now. The rates going crazy. The prices of the properties going higher,” said Jesus Carrero, First World Mortgage Southington branch manager, who said it's nice to see this excitement.
To learn more about the program, visit their website or call the CHFA homeownership hotline at 1-844-281-4663.
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