Did you know that you can use a down payment assistance program even if you already own a home? That’s right, you can buy a home using a down payment assistance program even if you are already a homeowner. For those looking to purchase a home in Colorado, Colorado Housing and Finance Authority (CHFA) has programs that allow you to own another home and still utilize their assistance programs.
Using a down payment assistance program after you have already achieved homeownership might seem a little counterintuitive, but it does have some unique advantages. If you are looking to keep your current home as a rental property, the use of a down payment assistance program such as CHFA could allow you to put as little as $1,000 down on your next home. In fairness, we would need the seller to contribute enough concessions to cover all the closing costs and pre-paid items in order to put the minimum $1,000 down but it is a possibility versus the potential need to put 5% down as a non-first-time homebuyer using conventional financing.
To be eligible to take advantage of the down payment assistance you must plan to occupy the home you are purchasing as your primary residence. Down payment assistance programs in general have this occupancy restriction but most don’t allow you to have another property and still qualify to use their programs. CHFA also only allows you to have one active CHFA loan at a time so if you had previously used one of their programs to purchase the home you would like to keep, you must have refinanced the home out of CHFA financing or do so prior to closing on the new home.
CHFA offers a variety of different down payment assistance programs that include FHA, Conventional, VA, and USDA. They offer down payment assistance in the form of repayable second mortgages and in some cases grants that do not require repayment. It is important to fully understand the short-term and long-term cost of the financing you are seeking regardless of whether it involves down payment assistance to ensure you are making the best financial decisions for your future. It may be possible to obtain more favorable interest rates and with lower fees when not utilizing a down payment assistance program so that should be factored into the decision-making process.
Have questions about whether using a down payment assistance program to purchase your next home is the right move for your family? Give me a call anytime to discuss! Jeremy 720-988-5182
