Urban Rehabilitation Homeownership Program (UR Home)

$25,000 FREE Urban Rehab Grant Money

The Urban Rehabilitation Homeownership Program supports homeownership and investment in Connecticut neighborhoods that have fallen into disrepair by offering home purchase loans at below-market interest rates, along side home improvement loans at no interest, to eligible borrowers.

Qualified applicants under this program must plan to purchase, repair and live in homes in Bridgeport, Hartford, New Haven, New London, Waterbury or in specific sections of Windham. Prospective borrowers may apply directly for a UR Home loan with a CHFA-approved UR Home lender.

Urban Rehabilitation Homeownership Program Interest Rates

Currently, the Urban Rehabilitation Homeownership Program is providing mortgages at the following rate:

• Interest rate: 4.000%** (APR range 4.1 - 4.5%)
• Fees: Up to One-and-a-Half Points (1.5% Origination Fee)* Payable to Lender
• Term: 30 years, fixed rate

** Please note, this rate is subject to change and additional fees may apply.

In addition, the program provides a 0% interest rate home improvement loan, forgivable in 20% increments over five years.

Who can apply for an Urban Rehabilitation Homeownership Program loan?

Eligible borrowers under the UR Home Program must be willing to purchase and occupy a home that needs repair in one of the following cities where they work full time:

• Bridgeport
• Hartford
• New Haven
• New London
• Waterbury
• Sections of Windham

In addition, borrowers must be one of the following types of employees to qualify for a UR Home loan:

• State employees with local offices in one of the cities identified above.
• Municipal employees of one of the cities identified above, so long as the city agrees to waive the home improvement taxes on the purchased home for five years.
• Employees of private companies who work in one of the above cities.

Please note: UR Home Rehabilitation loans are not restricted to first-time homebuyers and are not subject to the income limits normally imposed on CHFA borrowers unless the borrower is requesting downpayment assistance. However, prior home owners must sell any previously-owned homes before closing on a UR Home loan.

What types of property can you purchase with an Urban Rehabilitation Homeownership Program loan?

The UR Home Loan Program requires that applicants purchase homes in need of repair that also meet specific property and sales price guidelines.

Property Guidelines:

In order to qualify for this program, the applicant must use the loan to purchase a home in which he or she will reside year-round. The applicant may not use the loan to purchase recreational, vacation, investment, commercial or rental properties. No part of the purchased property may be designed for commercial purposes.

In addition, the property must be either:

• A single-family home or
• A multi-family home with no more than four units

Finally, eligible property under a UR Home loan must be located in Bridgeport, Hartford, New Haven, New London, Waterbury or specific sections of Windham.

Sales Price Guidelines:

In order to qualify for this program, the purchase price of a home must not exceed the CHFA sales price limit established for the specific city or town in the state where the property is located. (See, the CHFA sales price limits.)

What types of repairs are covered by a UR Home loan?

In general, repairs that correct structural damage, repairs that eliminate safety and health hazards and repairs that promote disabled accessibility and energy efficiency are eligible for a UR Home loan. All improvements must comply with Connecticut and local codes and ordinances. (For a more detailed list of allowable improvements, see UR Home Allowable Improvements Fact Sheet.)

What else should you know about an Urban Rehabilitation Homeownership Program loan?

The following additional considerations and restrictions apply to Urban Rehabilitation Homeownership Program loans.

Rehabilitation loans are capped.

Home improvement loans under the UR Program may not exceed $20,000 for repairs to a single family home or $25,000 for repairs to multi-family homes. Because of a limited funding source, these loans are made on a first-come, first-serve basis. Any money not used for repairs must be returned to CHFA.

Repairs must be completed within six months.

Home repairs must be completed within six months of the date of closing on the loan. Extensions of this deadline may be granted by CHFA on a case by case basis.

Repair work must performed by a licensed contractor.

Borrowers may not do the repair work on the eligible property. They are required to hire a Connecticut licensed contractor, other than themselves, to perform the repair work.

Eligible homes must be inspected.

Borrowers must pay for an inspection of the home they intend to purchase and repair. The inspection must be performed by a Connecticut licensed home inspector. The cost of a home inspection ranges from $300 to $750 and may be covered by a Downpayment Assistance Program loan.

UR Home borrowers must work with CHFA counseling agency.

Before applying for a UR Home mortgage, applicants must attend a free homebuyer counseling session. Additionally, borrowers must work with the counseling service during the bid and repair process of their purchased homes. (See, Homebuyer Education schedule of classes.)

UR Loan borrowers may qualify for additional down payment assistance.

For those who lack sufficient funds to cover the upfront expenses of buying a home that needs repair, qualified borrowers may apply for a supplementary loan through the Downpayment Assistance Program (DAP). DAP loans are secured by a second mortgage on the home and can be used to pay home inspection and closing costs, as well as the down payment.

Please note: Qualified DAP borrowers must meet CHFA income limits.

Mortgage insurance may be required.

A UR Home loan may be insured either through the Federal Housing Administration (FHA), the Veterans Administration, if the borrower is a veteran, the USDA Rural Development or through private mortgage insurance (PMI). Participating lenders can provide more detailed information on the mortgage insurance options under this program.

You may be required to pay a special federal tax if you sell your home within nine years.

Under rare circumstances, CHFA mortgage loans may be subject to the Federal Recapture Tax at the time the property is sold. The tax might apply if a borrower sells his or her home within nine years of the purchase date, makes a profit on the sale and has an income that exceeds Federal Recapture Tax limits at the time of the sale.

You may be required to pay a federal tax on the rehabilitation loan.

The UR Home rehabilitation loan may be subject to the IRS “forgiveness of debt” regulation. UR Home lenders can provide more detailed information on the possible tax implications of this loan.

Questions? Contact ShoreViews!