In celebration of National Homeownership Month, CHFA has launched a new program to help Colorado’s first-time homebuyers save up to $2,000 annually on their federal income taxes.
The program, called CHFA SmartStep, combines CHFA’s most affordable 30-year fixed rate mortgage with a Mortgage Credit Certificate and optional down payment assistance.
Buying antidote to rising rents
“As rents rise and housing prices begin to stabilize, CHFA’s new SmartStep program will help first-time buyers achieve homeownership through responsible and stable financing,” said Cris White, CHFA executive director and CEO.
“CHFA’s interest rates are the lowest they’ve been in our history,” he added. “This combined with the savings available through the Mortgage Credit Certificate and relatively affordable home prices make it an opportune time to buy.”
The Mortgage Credit Certificate works by allowing buyers to count a percentage of the mortgage interest they pay annually as a $1-for-$1 tax credit against their federal income tax.
CHFA first made Mortgage Credit Certificates available statewide as a stand-alone program in 2009. Since then, participation has increased from only 14 homeowners taking advantage of CHFA’s Mortgage Credit Certificate program to more than 300 homeowners in 2011.
Last year’s participation reached across the state with 21 percent in Mesa County, 25 percent in Larimer and Weld counties, and 47 percent in the Denver metro region
To increase the benefit for Coloradans, CHFA has updated its Mortgage Credit Certificate program by increasing the amount of tax credit available for buyers depending on the amount of their loan, with a maximum annual credit of $2,000.
Loan amounts less than $100,000 receive a 50 percent credit, loans between $100,001 and $150,000 receive a 30 percent credit, and loans over $150,001 receive a 20 percent credit.
The tax credit provided through Mortgage Credit Certificates remains valid for as long as the certificate holder is the primary resident of the property, or until they refinance.
Borrowers refinancing can reapply for their Mortgage Credit Certificate.
To be eligible for the CHFA SmartStep program borrowers must be first-time homebuyers, have a minimum 620 FICO score and meet income and purchase price limits.
All CHFA borrowers must contribute at least $1,000 towards the purchase of their home, as well as complete a free homebuyer education class.
Non first-time homebuyers who are eligible veterans or purchasing a home in an IRS-identified target area may also participate in SmartStep. To learn more, including a list of targeted areas, please visit this CHFA link. SmartStep is available through CHFA’s network of participating lenders. For a list of participating lenders, please visit this CHFA link.