Down Payment/Closing Cost Assistance

What is Down Payment/Closing Cost Assistance?

Down Payment/Closing Cost Assistance is a forgivable loan for homebuyers in New Haven, Connecticut.

• The City of New Haven Down Payment / Closing Cost Assistance program provides first-time homebuyers with a zero-interest forgivable second mortgage of up to the greater of 6% of the purchase price or $20,000 for the purchase of a 1-4 unit owner-occupied home in New Haven. The loan is forgiven at 20% per year, fully forgiven at the end of year 5. The program is funded with HUD HOME / CDBG pass-through dollars and administered by the City's Housing Administration and Development division (within the Economic Development Administration / Livable Cities Initiative). Applications are submitted to the City through participating mortgage lenders.
• Zero-interest forgivable second-mortgage loan of up to the greater of 6% of the purchase price or $20,000, used for down payment, closing costs, or a combination of both. Loan is forgiven at the rate of 20% per year, fully forgiven at the end of year 5. No monthly payments. The applicant may sell or transfer the property at any time during the 5-year monitoring period provided the unforgiven balance is repaid to the City of New Haven, or the property is sold/transferred to a buyer willing to assume the balance and the loan's terms.
• Funding comes from HOME, CDBG, Federal, and Local Government.

How much assistance does it provide?

Down Payment/Closing Cost Assistance provides assistance worth 6% of the purchase price, as set by the program.

• Buyer contribution: Minimum borrower contribution per first-mortgage program.
• The program can be combined with other assistance, subject to the rules of each.
• Amounts are the program's published maximums, not an offer — the administering agency determines any individual award.

Do you have to pay it back?

Down Payment/Closing Cost Assistance is forgiven after 5 years, so a buyer who stays that long does not repay it.

• Repayment is triggered by Loan is forgiven at 20% per year over 5 years (fully forgiven at year 5). If the home is sold, refinanced with cash-out, transferred, or no longer owner-occupied during the 5-year monitoring period, the unforgiven balance is due and payable to the City of New Haven (or the loan may be assumed by an income-eligible buyer accepting the same terms).
• The assistance is recorded in 2 position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

Down Payment/Closing Cost Assistance is open to first-time homebuyers and buyers who will live in the home as their primary residence.

What are the income limits?

Down Payment/Closing Cost Assistance limits household income to 80% of the area median income, which varies by county and household size.

• Household income at or below 80% of the New Haven-Milford MSA Area Median Income, adjusted by household size: approximately $65,050 (1-person) up to $122,650 (8-person). Limits are updated annually by HUD.
• The limit applies to total household income, not only the borrower’s.
• The program lists a maximum household size of 8.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

Down Payment/Closing Cost Assistance caps the purchase price as follows: No fixed dollar maximum published; subject to HUD HOME 95% maximum-purchase-price rule for the New Haven area.

• Eligible property types include Single-family detached, 2-unit, 3-unit, 4-unit, and Condominium.
• New construction is eligible.
• Manufactured homes are not eligible.

Where does it apply?

Down Payment/Closing Cost Assistance serves buyers purchasing in New Haven, Connecticut.

How do you apply?

Applications for Down Payment/Closing Cost Assistance go through the administering agency, which publishes the current terms and the application steps on its own site.

1. 1

   Take a homebuyer education course

   Required by the program, through HUD-approved housing counseling agencies serving New Haven (e.g., NHS of New Haven, HDF Connects, Connex Credit Union counseling network); 8-hour homebuyer education required..

2. 2

   Contact the administering agency to reserve funds

   Funds are reserved through Submitted by participating lender to the City; first-come, first-served subject to annual HUD HOME / CDBG funding allocation., and are subject to availability.

3. 3

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.