As part of the American Recovery and Reinvestment Act (ARRA), Congress and President Obama approved a federal tax credit for first time homebuyers to help stimulate the housing market. The federal tax credit offers first time buyers a tax rebate up to $8,000 for homes purchased between April 1, 2009, and November 30, 2009.
Colorado Housing and Finance Authority (CHFA) saw a way to help Colorado’s first time buyers leverage the tax credit into down payment and/or closing costs assistance. To accomplish this, CHFA developed a new program entitled CHFA JumpStart. CHFA JumpStart offers borrowers a 30-year fixed rate mortgage with competitive interest rates to pay for the home, and an interest-free, payment-deferred second mortgage to cover down payment and/or closing costs. The second mortgage may be up to 3.5 percent of the purchase price of the home or $6,000, whichever is less. Borrowers are expected to use their $8,000 first time homebuyer federal tax rebate to payoff the second mortgage by June 30, 2010. If the second mortgage is not paid off in full by the June 30, 2010 deadline, it coverts to an 8 percent (8%) interest loan with monthly payments due over a 10-year amortization period.
As of November 30, 2009, 99 Coloradans have taken advantage of the CHFA JumpStart Tax Credit Program. It has helped close more than $13 million in mortgage loans, which is estimated to generate $25 million in economic impact and support 175 jobs.1
In addition to this unique home finance opportunity, CHFA offers all of its CHFA JumpStart customers access to free homebuyer education classes available in-person or online. These classes help prepare prospective homebuyers for the responsibility of homeownership including instructions on debt management, basic home maintenance, and the homebuying process. CHFA services all of its customers’ loans itself in its Denver and Grand Junction offices. CHFA is rated a Tier One Loan Servicer by the U.S. Department of Housing and Urban Development (HUD) because of its high quality customer service and demonstrated commitment to assisting its customers remain successful homeowners.
About Colorado Housing and Finance Authority
CHFA finances the places where people live and work. Created in 1973 by the Colorado State Legislature, CHFA strengthens communities by making loans to low- and moderate- income homebuyers, affordable multifamily rental housing developers, and small and medium sized businesses. CHFA also provides education and technical assistance about affordable housing and economic development. CHFA is a self-sustaining public enterprise funded by issuing bonds. CHFA issued bonds are not obligations of the state. For more information about CHFA please visit www.chfainfo.com. Contact our Denver office at 1.800.877.chfa (2432), or our Western Slope office at 1.800.877.8450.
1 Economic impact assessments made by CHFA using RIMSII regional multiplies. Methodology and definitions available at
http://www.chfainfo.com/documents/methodology_econ_impact.pdf