Military Homeownership Program offers home buying assistance for members of the armed forces

Members of the military who are interested in purchasing a home might be able to find some assistance through a state program offering advantageous mortgage interest rates.

The Military Homeownership Program is overseen by the Connecticut Housing Finance Authority. The program is open to active duty members of the United States military and National Guard as well as veterans. Unmarried widowed spouses and civil union partners of people who died as a result of military service may also be eligible.

The goal of the Military Homeownership Program is to assist military personnel with purchasing a home. The CHFA says the program currently offers interest rates of 2.875 percent on government insured loans and 3 percent on loans that are not insured by the government. The interest rates apply to 30-year fixed rate mortgages, and the rates may change over time.

The program is primarily intended for first-time homeowners. The CHFA defines first-time buyers as people who have never purchased a home or have not had an ownership interest in a residence in the past three years.

However, people who have previously owned a home may still be able to take part in the program under certain conditions. One option is to purchase a home in a "targeted area" which the federal government has recognized as a place where increased homeownership would benefit the community. The targeted areas include New London as well as portions of Groton and Norwich.

In addition to this option, people who have previously bought a home can participate in the Military Homeownership Program if they have been granted an exemption under the Tax Relief and Health Care Act of 2006. Participants cannot use the program to purchase a vacation home or a property intended as an investment, commercial venture, or rental property.

In order to qualify, an applicant's pretax household income cannot exceed the limits set by the CHFA. These limits are defined by size of the household as well as the community where the home is located. This condition does not apply for homes in targeted areas unless the applicant seeks down payment assistance from the CHFA.

Several residences will qualify for purchase through the Military Homeownership Program. These include new and existing single-family homes and condominiums, two- to four-family homes that have been used as residences in the past five years, newly constructed two-family homes in targeted areas, and mobile homes, condominiums, or newly constructed homes that meet the Federal Housing Administration's guidelines.

The property purchased by the applicant should not exceed a maximum sales price set by the CHFA. These prices are determined by the median income and cost of living in the community, as well as whether the purchased property is an existing or new home.

The applicant should plan to live in the residence year-round. Should they be called to active duty, they need to consult with the CHFA before renting the home.

People taking part in the Military Homeownership Program can also participate in the CHFA's Downpayment Assistance Program if they do not have sufficient funds for a home purchase. The CHFA notes that mortgage insurers typically require a down payment of at least 3.5 percent of the purchase price.

Borrowers need to be insured through the Federal Housing Administration, Veterans Administration, or USDA Rural Development in order to qualify for the program. If a borrower is able to make a down payment of at least 15 percent, they may use private mortgage insurance. Mortgage insurance is not required if they are able to make a down payment of at least 20 percent.

The CHFA also notes that the loan may be subject to a Federal Recapture Tax in certain circumstances. This tax might be applicable if the borrower sells the home within nine years, makes a profit on the sale, and has an income level higher than the tax's limits. If the Federal Recapture Tax is applied, the CHFA will compensate the homeowner.

Currently, there are 124 lenders participating in the Military Homeownership Program. After a person applies for a loan through the program, it usually takes six to eight weeks to close on a home purchase.

For more information on the Military Homeownership Program, visit chfa.org.