Overcome homebuyer hurdles with Chenoa Fund down payment assistance
Many of today’s homebuyers are struggling against challenging odds. Between dealing with the shortage of affordable homes to coming up with the funds for a down payment and closing costs, it is no wonder some people are still sitting on the sidelines. However, there is a homebuyer hack that is gaining more traction in the current Rhode Island market… learning how to use down payment assistance (DPA) strategically for the funds needed to buy a new home.
Coming up with this money is still a significant obstacle for first-time homebuyers and other qualified buyers. That is where programs like the Chenoa Fund—powered by The CBC Mortgage Agency’s down payment assistance program—come in. The Chenoa Fund is designed to increase homeownership for creditworthy borrowers through authorized lenders like Mortgage Equity Partners. Over the years, this program has helped thousands of borrowers unlock the doors to homeownership and build financial wealth through home equity.
How does the Chenoa Fund work?
The Chenoa Fund provides second mortgages to be used with FHA loans to cover the minimum down payment requirement when purchasing an FHA-insured home. In effect, pairing the DPA with an FHA loan requires no money from the borrower, and the entire cost of the house is financed.
The Chenoa Fund DPA for FHA loans offers two options for homebuyers:
1. Repayable
The Repayable second requires a 10-year term with a note rate the same as the first mortgage note rate. This loan requires a monthly payment on the second mortgage.
2. Forgivable
The forgivable loan has a 30-year term with an interest rate of 0% (0% APR). This loan does not require a monthly payment on the second mortgage.
Terms:
3.5% Chenoa Fund DPA
Forgivable after 36 consecutive, on-time payments on the FHA first mortgage. This forgiveness period resets if the borrower makes a late payment, but the borrower has the full 30-year term to meet the forgiveness conditions. This loan may also be forgiven at the end of the 30-year term if the previous forgiveness condition has not been met.
5% Chenoa Fund DPA
Forgivable after the initial 120 consecutive, on-time payments on the FHA first mortgage. This forgiveness period is terminated if the borrower has a payment that is 60+ days late, but the loan will remain with a 30-year term, 0% interest rate (0% APR), and no monthly payment.
Both forgivable loan options may be forgiven at the end of the 30-year term if the previous forgiveness conditions have not been met, even if the borrower made late payments on the FHA’s first mortgage. If it is not already forgiven, the loan must be repaid upon transfer of ownership or refinance.
Program Benefits
- No income limits!
- Minimum FICO credit score of 600.
- Down payment assistance for 3.5% or up to 5% of the home purchase price.
- Do not have to be a first-time homebuyer.
- Fast approval without review delays.
- 18 months of post-purchase counseling for borrowers.
Working with Mortgage Equity Partners and the Chenoa Fund provides a powerful option for low- to moderate-income homebuyers. A qualified loan officer can detail how combining this DPA Option with an FHA loan gives you a 100% financing option to make homeownership possible and more affordable for buyers who lack sufficient savings for a down payment or cannot get financial help from family members.
Multiple DPA programs are offered by states and local governments nationwide, but when these options are not a great fit, the Chenoa Fund, powered by CBC Mortgage agency and offered through Mortgage Equity Partners, can put homeownership back in the reach of deserving, often underserved Rhode Island borrowers.
