Chenoa Fund Down Payment Assistance

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What You Should Know

  • Chenoa Fund is a down payment assistance program offered by CBC Mortgage Agency.
  • Chenoa Fund has 4 down payment assistance products that can be used by qualifying individuals with a conventional, FHA or Fannie Mae mortgage.
  • Chenoa Fund provides a loan for 3% to 5% of the purchase price at a minimum interest rate of 0%.

What is a Chenoa Fund?

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Chenoa Fund is a national down payment assistance program offered by CBC Mortgage Agency. CBC Mortgage Agency is a government agency that creates homeownership opportunities for low to moderate-income individuals. Chenoa Fund offers a variety of financial and non-financial resources that may help low to moderate-income individuals to purchase a property and pay off a mortgage.

Currently, Chenoa Fund has 4 down payment assistance products that aim at people with low to moderate income. These products can work only with FHA loans, conventional loans, and some conforming loans. The following list contains the 4 products Chenoa Fund currently has:

ProductApplicable Mortgage TypeDown Payment Assistance
Rate AdvantageFHA3.5% / 5%
DPA Edge Repayable SecondFHA3.5%
DPA Edge Soft (Forgivable) SecondFHA3.5% / 5%
Standard ConventionalFannie Mae - Conventional Loan3%

Each down payment assistance program comes with certain requirements that potential buyers must meet to qualify for the program.

Chenoa Fund Programs

Each program in Chenoa Fund is aimed primarily at low to moderate income individuals to provide a down payment assistance (DPA) when purchasing a property. Some of them provide assistance without any limit on income, but there are limitations on what type of property may be purchased. The following table summarizes the benefits and requirements of different programs. In this table, AMI refers to Area Median Income, DTI refers to debt-to-income ratio and FICO refers to the credit score.

First LoanDPATerm LengthInterest Rate
Rate AdvantageFHA3.5%10 Years6%
Edge RepayableFHA3.5% or 5%10 or 30 Years0% or 5%
Edge SoftFHA3.5% or 5%30 Years0%
ConventionalConven-
tional
3%10 YearsFirst Loan Rate + 2%

Requirements

Max Qualifying IncomeMinimum FICO Score
Rate Advantage135% AMI640
Edge RepayableN/A600
Edge Soft115% AMI600
ConventionalN/A620
Concurrent
Homeownership
Maximum DTI
Rate AdvantageNot Allowed50%
Edge RepayableAllowedBased on FICO
Edge SoftAllowedBased on FICO
ConventionalAt Least 1 Borrower is First-Time HomebuyerBased on FICO

There are other program specific requirements that borrowers have to meet to qualify for the assistance. The following section provides an overview on all products offered by CBC Mortgage Agency through Chenoa Fund.

Rate Advantage

Rate Advantage is a down payment assistance program that provides a second mortgage for a down payment and gets paired with an FHA loan. This program provides assistance for 3.5% or 5% of the purchasing price of a property. With these funds, a borrower can pay for a down payment, closing costs, or prepaid items.

This down payment assistance program is offered with a 6% interest rate and a 10-year loan term. There are also certain requirements a borrower must meet to qualify for the program. The following list provides all requirements a borrower must meet.

  • Qualifying Income is no more than 135% AMI
  • Minimum Credit Score of 640
  • No Non-Occupant Co-Borrowers
  • No Concurrent Homeownership
  • Maximum Debt-to-Income (DTI) Ratio of 50%
  • No Manual Underwrites

DPA Edge Repayable Second

DPA Edge Repayable Second provides a forgivable second mortgage that is paired with an FHA secured mortgage. This program provides assistance of 3.5% of the purchase price, and it can be applied towards a down payment, closing costs, or prepaid items. This loan has fewer restrictions than Rate Advantage. DPA Edge Repayable Second has no restrictions on maximum income, it allows non-occupant co-borrowers and concurrent homeownership, and its DTI requirement ranges with FICO score.

This loan is offered for 2 terms. A borrower may choose between a 10-year loan term with 0% interest and a 30-year loan term with a 5% interest rate. The borrower can estimate the mortgage amortization schedule for both options and pick the most favorable. With these terms, there are certain requirements that must be met by the borrower and the property purchased.

  • Monthly Payments Are Required
  • Only 1-2 Unit Properties Are Allowed
  • Borrowers With 600 - 629 Credit Score Must Complete Pre-Purchase Homebuying Counseling.

DPA Edge Soft Second

DPA Edge Soft Second is very similar to DPA Edge Repayable Second because it is also a forgivable second mortgage that is paired with an FHA mortgage. It offers 3.5% or 5% down payment assistance for low to moderate income individuals. The funds can go towards a down payment, closing costs, or prepaid items.

This loan is offered for 30 years with a 0% interest rate. It also has different forgiveness requirements that must be met for 3.5% and 5% assistance. For a 3.5% assistance, the loan is forgivable after 36 consecutive months of on-time payments towards the FHA loan. For a 5% assistance, the loan is forgivable after the first 120 consecutive months of on-time payments towards the FHA loan. This means that if a borrower who applied for 5% assistance, misses 1 payment towards the FHA loan, then the borrower may not be able to have the second loan to be forgiven. On the other hand, if a borrower who applied for 3.5% assistance, misses 1 payment towards the FHA loan, they may try to make 36 consecutive months of on-time payment again.

The following requirements must be met by borrowers before applying for the program:

  • Qualifying Income of no More Than 115% AMI
  • Minimum Credit Score of 600
  • Only 1-2 Unit Properties Are Allowed
  • Borrowers With 600 - 629 Credit Score Must Complete Pre-Purchase Homebuying Counseling.

Standard Conventional

This down payment assistance program is suited for conventional and Fannie Mae mortgages that have a loan-to-value (LTV) ratio of 90% - 97%. This second mortgage provides 3% of the property purchase price and can be used towards down payment, closing costs, or prepaid items. The main difference between the Standard Conventional program and the other 3 programs is that this program allows DPA for regular conventional mortgages that are not insured by the government agencies.

Even though this program works for the most common type of a mortgage, there are strict requirements that must be met by the borrowers. The following requirements must be met to qualify for this program:

  • Single Family Properties Only
  • Credit Score of 620 or Higher
  • First Mortgage is 30-year Fixed Rate
  • Mortgage Insurance (MI) Coverage 35%
  • At least one borrower must be first-time homebuyer.
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