First-Time Homebuyer Programs in Connecticut

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Connecticut, where the average home value is $408,201, you would need a down payment of $81,640 to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs available in Connecticut to help you achieve homeownership. There are also mortgages that allow first-time homebuyers to put less down on a home, but these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Connecticut First-Time Homebuyer Programs

Connecticut offers grants and loans to assist first-time homebuyers with down payment and closing costs. We've compiled the first-time homebuyer programs provided by the Connecticut Housing Finance Authority (CHFA) to help you find the best option for your particular needs and situation.

CHFA Down Payment Assistance Program

The CHFA Down Payment Assistance Program (DAP) provides homebuyers with a low-interest second mortgage to cover down payment and closing costs. Borrowers can receive up to $15,000 in assistance, with the loan structured as a second mortgage. The interest rate for the DAP loan is either the same as the first mortgage rate or 5%, whichever is lower, helping make homeownership more affordable.

tax icon
ELIGIBILITY REQUIREMENTS

To qualify for the CHFA Down Payment Assistance Program, you must meet specific eligibility requirements.

  • Qualify for a CHFA mortgage from a participating lender
  • Show ability to repay the CHFA first mortgage and the DAP loan
  • DAP loan must be at least $3,000
  • Complete a homebuyer education class

Time to Own Forgivable Down Payment Assistance

The Time to Own program, administered by CHFA on behalf of the Connecticut Department of Housing, offers a forgivable loan to help eligible Connecticut homebuyers cover their down payment and closing costs. This 0% interest loan has no monthly payments, and 10% of the loan balance is forgiven annually over 10 years. Buyers can receive up to 20% of their down payment and 5% of closing costs, with loan amounts up to $25,000.

house icon
ELIGIBILITY REQUIREMENTS

To qualify for the Time to Own Forgivable Down Payment Assistance program, you must meet specific eligibility requirements. These criteria ensure that the program benefits those who truly need it.

  • Must qualify for a CHFA first mortgage
  • Connecticut resident for the last three years
  • Must not own other property at closing
  • Meet all CHFA first mortgage and Time To Own loan program eligibility and underwriting criteria

CHFA HFA Advantage and HFA Preferred Loan Programs

The HFA Advantage and HFA Preferred loan programs offered by CHFA are designed to provide affordable financing options with reduced mortgage insurance costs, making homeownership more accessible. Both programs feature competitive, fixed interest rates and are available for single-family homes, eligible condominiums and multi-unit properties.

These programs cater to first-time homebuyers and those in federally targeted areas with enhanced benefits like lower interest rates and higher income limits. They can also be combined with CHFA down payment assistance programs.

house2 icon
ELIGIBILITY REQUIREMENTS

To qualify for the CHFA HFA Advantage and HFA Preferred Loan Programs, you must meet specific eligibility requirements. These programs are designed to assist homebuyers in Connecticut. Below are the criteria you need to fulfill:

  • Have not owned a home in the past three years
  • Meet CHFA sales price limits for the home purchase price
  • Meet CHFA income limits based on household size
  • Complete a homebuyer education class
  • Buy a single-family home, condominium, townhome or planned unit development (PUD)

CHFA Teachers Mortgage Assistance Program

The CHFA Teachers Mortgage Assistance Program offers eligible teachers a 0.125% reduction off the already below-market interest rate, with a further 0.25% reduction for minority teachers to recruit and retain them. This program also offers an additional rate reduction of 0.250% if purchasing a home in a targeted area. Moreover, it provides access to down payment assistance and can be combined with other CHFA programs to lower the overall costs of homeownership.

mortgage icon
ELIGIBILITY REQUIREMENTS

To qualify for the CHFA Teachers Mortgage Assistance Program, you must meet specific eligibility requirements. These criteria ensure that the program benefits those who are teaching in Connecticut and looking to buy a home. Below are the eligibility requirements you need to fulfill:

  • Hold a valid Connecticut teaching certificate
  • Be a first-time homebuyer or purchasing in a targeted area
  • Teach in a priority or transitional school district, technical education system, or shortage subject area
  • Meet CHFA income and sales price limits
  • Complete a homebuyer education course

CHFA Home of Your Own Program

CHFA's Home of Your Own Program offers a low-interest mortgage with optional down payment assistance to individuals with disabilities or households with a disabled member. Applicants must provide proof of disability, such as evidence of Supplemental Security Income (SSI) and/or documentation from the State Department of Social Services (DSS) or Department of Developmental Services (DDS).

homeMortgage icon
ELIGIBILITY REQUIREMENTS

To qualify for the CHFA Home of Your Own Program, you must meet specific eligibility requirements. These requirements are designed to ensure that the program benefits those who need it most. Below are the eligibility criteria you need to fulfill:

  • Be a first-time homebuyer or purchasing in a targeted area
  • Provide documentation of disability for themselves or a family member
  • Meet CHFA income and sales price limits
  • Complete a homebuyer education course
  • Use the home as a primary residence

Connecticut First-Time Homebuyer Programs by City

Aside from statewide first-time homebuyer programs in Connecticut, city-specific programs are also available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Connecticut that provide first-time homebuyer programs for potential residents.

City
First-Time Homebuyer Program

Bridgeport

Bridgeport, in partnership with Bridgeport Neighborhood Trust, offers the First Time Homebuyer Down Payment Assistance Program. Eligible first-time homebuyers can receive up to $25,000 in down payment and closing costs assistance through a forgivable loan. Funds are disbursed on a "first come, first served" basis. The program requires you to contribute a minimum of 1% of the purchase price and provide a written pre-approval from a mortgage lender.

Hartford

The HouseHartford Homebuyer Assistance Program provides down payment assistance of up to 20% of the purchase price or $40,000 for the purchase of one- to four-family homes located in Hartford. To qualify, you must purchase an eligible property located in the city and meet city-specific income limits.

Zero-Down-Payment Loan Programs in Connecticut

In Connecticut, there are zero-down-payment loan programs that allow you to purchase a home without putting money down. USDA and VA loans are two types of government-backed loans that offer this benefit.

USDA Loans

USDA loans are designed to help eligible rural homebuyers secure financing for their homes. The USDA loans program, offered by the U.S. Department of Agriculture, aims to promote homeownership in rural areas by offering favorable loan terms.

USDA loans provide various benefits, including the ability to purchase a home with no down payment and access to competitive interest rates. These loans are intended to make homeownership more accessible to individuals and families in rural communities. Borrowers may also benefit from lower mortgage insurance costs compared to other loan types.

To qualify for a USDA loan, the property must be 2,000 square feet or less and located in a rural area with a population under 35,000. Income limits also apply, varying by location. For instance, in Danbury, CT, the income limit is $103,600, while in Waterbury, CT, it is $91,750 for a four-person, low-income household. Understanding these requirements is crucial for determining eligibility and making informed decisions about home financing in rural areas.

VA Loans

VA loans, issued by the U.S. Department of Veterans Affairs, provide a valuable option for veterans, active-duty service members, and certain members of the National Guard and Reserves. These loans aim to make homeownership accessible for those who have served the country by offering favorable terms compared to conventional loans.

VA loans offer several advantages, including a no-down payment requirement, which can significantly reduce the initial cost of purchasing a home. Additionally, VA loans do not require private mortgage insurance (PMI), further lowering monthly payments. They generally come with lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Connecticut is 6.14%, while a 30-year fixed-rate VA loan stands at 6.36%.

To qualify for a VA loan, you must meet specific eligibility requirements, including length of service or service commitment, duty status, and character of service. Additionally, income limits may apply depending on your location. A valid Certificate of Eligibility (COE) is also necessary to access these loans. Understanding these criteria is crucial for determining your eligibility and planning your home purchase effectively.

Low-Down-Payment Loan Programs in Connecticut

First-time homebuyers in Connecticut can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

    loans icon

    Conventional Loans

    Conventional loans are a popular choice for homebuyers, offering flexibility with a down payment as low as 3%, depending on the lender. These loans come in two main types: conforming, which adhere to Freddie Mac or Fannie Mae guidelines, and non-conforming, which exceed those limits. If your down payment is 20% or less, you'll need to pay for private mortgage insurance. Eligibility requirements include a minimum credit score of 620 and a debt-to-income ratio of 43% or lower.

    homeMortgage icon

    FHA Loans

    FHA loans are designed to help homebuyers by following Federal Housing Administration policies. In Connecticut, the mortgage limit for 2024 is $766,550 for single-family homes and $981,500 for two-family homes. To qualify, you'll need a minimum credit score of 500 and a 3.5% down payment. Remember, if you put down less than 20%, private mortgage insurance is required.

    paintingRoller icon

    FHA 203(k)

    FHA 203(k) loans are unique in that they combine the cost of renovations into your mortgage. There are two main types of these loans. With a 3.5% down payment, this option is available to those with a credit score between 500 and 580 and a front-end debt-to-income ratio of 31% or less. It's not restricted to first-time homebuyers, but you can't have two FHA loans at the same time.

FHA vs. Conventional Loan: Which Is Right for You?

FHA loans and conventional loans are often compared as they are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements compared to FHA loans, making them less accessible for some borrowers.

The current APR for a 15-year fixed-rate conforming loan in Connecticut is 6.03% as of November 2024. In contrast, the APR for a 15-year fixed-rate FHA loan is 8.09%. APRs on FHA loans can be higher because there tend to be more fees and extra costs associated with borrowing money on government-backed loans.

To help you compare both FHA and conventional mortgage programs, you can use our FHA vs. conventional loan calculator below to determine the best option for you.

FHA vs. Conventional Loan Calculator

Compare FHA and conventional mortgage programs to better understand your loan opportunities in Connecticut.

Basic Details

Some basic details about the property and loan
$
$
%

Interest Rate

%
%
Calculation Results
Financial AnalysisFHAConventionalDifference
Monthly Payment (First Year)FHA$0Conventional$0Difference$0
Upfront Costs FHA$0Conventional$0Difference$0
Total 30-Year CostFHA$0Conventional$0Difference$0
Total 5-Year CostFHA$0Conventional$0Difference$0
Monthly Mortgage Insurance (First Year)FHA$0Conventional$0Difference$0
Down PaymentFHA$0Conventional$0Difference$0
Calculator results are rounded to the nearest whole dollar.
fairCredit icon
RECOMMENDED CREDIT SCORES FOR FIRST-TIME HOMEBUYERS

Qualifying for first-time homebuyer programs often involves meeting minimum credit score requirements, which can vary depending on the loan program. Conventional loans typically require a credit score of 620, while government-backed loans like FHA loans may need a minimum score of 500. Understanding these requirements can help potential buyers assess their eligibility for various loan options.

In Connecticut, the average credit score in the third quarter of 2023 was 726, according to Experian. This suggests that many residents are well-positioned to qualify for both conventional and FHA loans, as their scores exceed the minimum requirements. This can provide confidence to prospective homebuyers in the state as they explore their options.

FAQ: First-Time Homebuyer Programs in Connecticut

To help you get closer to achieving homeownership, we have addressed frequently asked questions about first-time homebuyer programs in Connecticut, enabling you to determine the best option for your needs.

Does Connecticut have first-time homebuyer programs?

What qualifies me as a first-time homebuyer in Connecticut?

Can you buy a house in Connecticut with no down payment?

Who can help me with my down payment on a house in Connecticut?

Additional Resources for First-Time Homebuyers in Connecticut

Explore additional MoneyGeek resources for first-time homebuyers in Connecticut to help you with the homebuying process.

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


sources