CHFA FirstStepsm and CHFA FirstGenerationsm are CHFA’s lowest-rate mortgage loan programs for your customers, helping them save thousands of dollars over the life of the loan!
Low interest rate → Additional guidelines → Prior to closing, a program compliance review is required
FirstStep and FirstGeneration are funded with tax-exempt bonds, which allows CHFA to charge a lower interest rate; however, bond funding requires borrowers meet additional IRS requirements. Our team of experts is on-hand, ready to help you deliver the best option for your customer by helping you meet the requirements.
How to pass the compliance review and have a streamlined closing
- Prepare your borrower up-front that they will probably have to submit more paperwork, so they aren’t surprised later.
- Prepare your team by understanding the nuances of the programs before moving forward by attending a training.
- Download the CHFA FirstStep and FirstGeneration flyer (PDF) and learn more about CHFA FirstGeneration here.
CHFA Overlays
- FirstStep: restricted to first-time homebuyers, qualified veterans, or non-first-time homebuyers purchasing in targeted areas (see CHFA Seller's Guide for definitions)
- FirstGeneration: restricted to first-generation homebuyers. A first-generation homebuyer is any borrower who has never owned a home and whose parents or guardians have never owned a home. Borrowers having lived in the foster care system do not need to be first-generation homebuyers but must have never owned a home.
- FHA only
- Down payment assistance second mortgage loan only; no CHFA grant
- Purchase price limits
- Income limits vary by county, household size, and targeted area (two separate income calculations are required; see below for more details.)
- Most recent year's tax return or transcript
- Completion of additional affidavits required (CHFA Form 401, Initial Applicant Affidavit, and CHFA Form 402, Final Applicant Affidavit)
- Subject to IRS Recapture Tax if certain criteria are met
Most common obstacle for approval: Whose income is counted?
To qualify for the program, your borrower must meet two income qualifications:
- Lender underwriter’s Credit Qualifying Income: calculation of income for FHA loan-qualifying purposes; includes all borrowers’ income who will be on the loan.
- CHFA’s Gross Annual Income: calculation of income to determine if income meets CHFA income limits; includes all borrowers’ income, plus income from any spouse or civil union partner who will reside in the home. CHFA income limits vary by county, household size, and targeted area.
It is important to understand that you will have two separate incomes calculations, which rarely match. Each calculation is required for different reasons. CHFA’s Gross Annual Income calculation is usually higher than the FHA Credit Qualifying Income.
The Apple family found the perfect home for their multigenerational family. The home is comprised of the following occupants:
|
|
| Whose income is counted towards CHFA's Gross Annual Income? Why? |
|
| Whose income is not counted towards CHFA's Gross Annual Income? Why? |
|
Some additional documentation CHFA may require for our Gross Annual Income calculation include:
- All income documentation for each Borrower, Coborrower, and any occupant spouse or civil union partner of each Borrower
- Any dependent with differing last names on tax returns; letter of explanation and child support documents may be requested
- Profit and Loss Statement signed and dated for all self-employed Borrower, Coborrower, or any occupant spouse or civil union partner of each Borrower
Ace the compliance review and speed through to closing
Remember, prior to closing, these programs require program compliance review. Ace this process by attending a training. CHFA has a variety of options for you and your team. To learn more about CHFA FirstStep and FirstGeneration, download the CHFA FirstStep and CHFA FirstGeneration flyer (PDF) and view this CHFA FirstStep training (PDF). Learn more about CHFA FirstGeneration.