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CHFA FirstStepsm is CHFA’s lowest-rate mortgage loan program for your customers, helping them save thousands of dollars over the life of the loan!

Low interest rate → Additional guidelines → Pre-closing program compliance review required

FirstStep is 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.

In focus door, opened to a out-of-focus home

How to pass the compliance review and have a streamlined closing

  1. Prepare your borrower up-front that they will probably have to submit more paperwork, so they aren’t surprised later.
  2. Prepare your team by understanding the nuances of the program before moving forward. Get started by attending a training. To learn more about CHFA FirstStep, view this training PDF.

CHFA Overlays

  • Restricted to first-time homebuyers, qualified veterans, or non-first-time homebuyers purchasing in targeted areas (see CHFA Seller's Guide for definitions)
  • 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:

  1. Lender underwriter’s Credit Qualifying Income: calculation of income for FHA loan-qualifying purposes; includes all borrowers’ income who will be on the loan.
  2. 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:
  1. Jim – Borrower, earns $65k/year and has received $10k in overtime
  2. Debra – Non-borrowing Spouse, earns $50k/year
  3. Nancy – Daughter, earns $25k/year
  4. Steve – Son, non-earning dependent
  5. Grandma Josie – Coborrower, earns $35k/year
Whose income is counted towards CHFA's Gross Annual Income? Why?
  1. Jim: He is the Borrower; include overtime in calculation.
  2. Grandma Josie: She is the Coborrower.
  3. Debra: While not listed as a borrower, she is Jim’s spouse and is an occupant. If she was not an occupant, her income would not be counted.
Whose income is not counted towards CHFA's Gross Annual Income? Why?
  1. Nancy: she is not a Borrower, Coborrower, or the occupant spouse or civil union partner of any Borrower.
  2. Steve: he is not a Borrower, Coborrower, or the spouse or civil union partner of any Borrower. And, he has no income!

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, this program requires the pre-closing 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, view this training PDF.

Contact CHFA Home Finance

If you have any additional questions, please contact CHFA Home Finance​.​