Want to purchase a home but need help with the down payment? If so, check out the Chenoa Fund guidelines to see if you qualify. Sponsored by CBC Mortgage Agency, the Chenoa Fund is a national down payment assistance (DPA) program created to extend affordable and sustainable homeownership nationwide to creditworthy, low-to-moderate-income individuals and families.
Read on to find out more about Chenoa Fund guidelines as well as the benefits of down payment assistance.
What is the Chenoa Fund?
The Chenoa Fund is a national DPA program provided by CBC Mortgage Agency, a federally chartered government entity that provides assistance to new homeowners. The agency strives to increase homeownership in diverse communities and, to date, has provided DPA to over 25,000 borrowers, which mainly include minority and first-time buyers. Here are a few benefits of the Chenoa Fund:
- DPA of up to 5% of your home’s purchase price
- Customer service to guide you through the homebuying process
- Eighteen months of post-purchase counseling for homebuyers
- Minority-focused initiatives to help underserved communities build opportunity through sustainable homeownership
- Nationwide eligibility, with the exception of New York state
Can I use Chenoa Fund DPA with an FHA loan?
Though the Chenoa Fund isn’t directly affiliated with the Federal Housing Administration (FHA), you can use this DPA in conjunction with an FHA loan. You’ll just need a credit score of 600 or higher to qualify for these loan options:
- Repayable DPA loan: This 10-year loan requires monthly payments and comes with an interest rate 2% higher than that of your FHA first mortgage.
- 3.5% Forgivable DPA loan: This product offers a 30-year term with a 0% interest rate and doesn’t require monthly payments. In fact, if you make 36 consecutive, on-time payments on your FHA mortgage, the CBC Mortgage Agency will forgive the DPA loan, meaning you don’t have to repay it. Should you make a late payment, your forgiveness period will reset, but you have the full 30-year term to meet the forgiveness requirements.
- 5% Forgivable DPA loan: Also a 30-year, interest-free loan, the CBC Mortgage Agency forgives the loan if you make 120 initial, consecutive, on-time payments on your FHA first mortgage. Unlike the 3.5% DPA loan, however, you only get one chance for forgiveness. Should you make a payment that is late by 60 days or more, the CBC Mortgage Agency will terminate the forgiveness opportunity.
Even with late payments and unmet forgiveness conditions on either 30-year loan, however, the CBC Mortgage Agency can still elect to forgive your FHA loan at the end of its term. Additionally, should you refinance your loan or sell your home, you will need to completely repay the loan if it is not already forgiven.
For more information on Chenoa Fund guidelines, contact an OVM Financial expert. You can also explore our blog for relevant topics such as “What Help is There for First-Time Homebuyers?” and “Can You Get Down Payment Assistance with a Conventional Loan?”