Chenoa Fund Down Payment Assistance
Helping Californians Achieve homeOwnership
Chenoa Fund Down Payment Assistance
The Chenoa Down Payment Assistance Program is designed to help borrowers overcome the financial barrier of a down payment when purchasing a home. It is particularly valuable for first-time homebuyers and those with limited savings. The program is administered by the Chenoa Fund, which is operated by the CBC Mortgage Agency, a federally chartered government agency.
Key Features of the Chenoa Down Payment Assistance Program
Considerations
- Provides up to 3.5% of the purchase price or appraised value (whichever is lower).
- Covers the minimum down payment required and closing costs.
Loan Types
- Primarily paired with FHA Home Loans and HUD184 Native American Home Loans
- Assistance may also be available for conventional loans under certain conditions.
Assistance Structure
- Forgivable Second Mortgage:
- Fully forgiven after 36 on-time payments on the primary mortgage.
- Payments must be made on the primary loan, with no more than one 30-day late payment.
- Repayable Second Mortgage:
- Available as a 10-year or 30-year loan term.
- Fixed interest rates typically ranging from 0% to 8%, depending on the program.
Eligibility Criteria
- Minimum Credit Score: Usually 600 for most borrowers, though some programs may require a higher score.
- Income Limits:
- Some programs are income-restricted, targeting households earning less than 115% of the area median income (AMI).
- Other programs have no income limits, making them accessible to a broader range of buyers.
- Debt-to-Income Ratio (DTI): Must meet standard FHA or lender underwriting guidelines.
Property Requirements
- Must be an owner-occupied, primary residence.
- Eligible property types include:
- Single-family homes.
- Condominiums (FHA-approved).
- Manufactured homes (meeting FHA requirements).
Borrower Requirements
- Must complete a homebuyer education course approved by HUD or the program.
- Borrowers must meet the lender’s underwriting guidelines in addition to Chenoa’s requirements.
Programs Benefits
- Overcome Down Payment Barriers: Makes homeownership accessible to those without significant savings.
- Flexible Income Limits: Options for both income-restricted and unrestricted borrowers.
- Nationwide Availability: Offered in all states, regardless of local down payment assistance programs.
- Forgiveness Option: The forgivable second mortgage incentivizes borrowers to remain current on their primary loan.
- Enables homebuyers to purchase a home with little to no money out of pocket.
- Provides flexibility for borrowers with different financial situations.
- Helps borrowers improve cash flow by reducing upfront costs.
Programs Benefits
The Chenoa Down Payment Assistance Program is ideal for:
- First-time homebuyers struggling to save for a down payment.
- Buyers with moderate to low income looking for forgivable or repayable assistance.
- Borrowers needing help with upfront costs for an FHA or conventional loan.
The Chenoa Fund is a versatile option, enabling many buyers to achieve their homeownership dreams while tailoring assistance to their unique needs
Considerations
- Borrowers should carefully review the terms of the assistance, including repayment conditions and potential impact on their mortgage loan.
- Additional costs or interest rates may apply for the second mortgage, depending on the chosen assistance type.
- The interest rate on the first mortgage may be slightly higher than traditional FHA loans due to the associated assistance.
- Not all lenders participate in the Chenoa Fund; borrowers should partner with a lender experienced in the Chenoa program to ensure a smooth process.
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