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 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.

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.

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.

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.

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.

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).

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.

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 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, 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.

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.

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.

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.

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