CHFA announced on November 15, 2013, in Bulletins #58 and #59, beneficial changes to it’s family income eligibility policy and underwriting guidelines.
Beginning with loan reservations submitted to CHFA on or after November 25, 2013 the following changes are effective:
- The income used to determine eligibility for a CHFA mortgage will be based solely on the combined incomes of the borrower and co-borrower and NOT household income. For example, if both a husband and wife work, but only the husband is on the mortgage, CHFA will not include the wife’s income in determining eligibility for a CHFA mortgage. Today, income eligibility for a CHFA mortgage is based on the total household income, including household members with income that are on the mortgage.
- Despite the change to the income eligibility policy, family size will still be based on the number of individuals that will be living in the home (borrower, co-borrower (if applicable), their legal dependents, and any other permanent member that will be living in the home).
- The rate lock period will be reduced from 120 days to 90 days.
- To coincide with the change in the rate lock period, the CHFA commitment period will also be reduced from 120 days to 90 days.
- The total dollars in liquid assets borrower(s) will be allowed to retain under the asset test for down payment and closing cost assistance (DAP) will be increased from $5,000 to $10,000.
- 100% of funds in any retirement plan may be excluded from the assets used int the DAP asset test calculation, even if the plan allows the borrower to withdraw funds. This change, in my opinion, is huge. I always found it counter-intuitive that CHFA made borrowers withdraw monies from their 401(k) plans to make down payments and pay closing costs. With this change borrowers will be able to keep their 401(k) plan assets for retirement!
- Finally, monies received from tax refunds will also be excluded from the DAP asset test.
The above changes are great news and will expand the number of first-time home buyers who can consider a CHFA mortgage when purchasing their first home.