Neighborhood Housing Services of New Haven

Home Purchase with Rehabilitation

When a first-time homebuyer is considering the purchase of a house that is in need of moderate or even substantial renovation, there is no more useful mortgage product than a purchase/rehabilitation mortgage.  All too often, first-time buyers obtain conventional mortgages, take title to their new homes, and then wonder how they can obtain the funds needed to fix up the houses and make necessary repairs.  These homebuyers have a serious problem, since traditional home equity loans or lines of credit will most likely not be available unless they have made large down payments on their homes.  The purchase/rehabilitation mortgage provides the financing for a homebuyer to purchase a home and rehabilitate it, all with the same source of funds.

Buyers of two- or three-family homes most often depend on rental income to help them make their monthly mortgage payments.  Problems with a rental unit could easily place the rental income in doubt and leave the homeowner responsible for undertaking immediate repairs.  If funds are not available for this purpose, the owner’s ability to retain his or her home may be jeopardized.

The Connecticut Housing Finance Authority (CHFA) currently offers an Urban Rehabilitation Homeownership Program that provides generous grants for homebuyers who work in New Haven and are purchasing a home in the City that needs rehabilitation. Up to $25,000 for qualified improvements is available in the form of interest-free, deferred repayment loans that are completely forgiven after five years. For additional information, please visit the CHFA website.

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