Colorado provides additional help for first-time homebuyers

The Colorado Housing and Finance Authority rolled out a mortgage program Tuesday that advances a new federal tax credit for first-time homebuyers so they can purchase a home more easily.

Under the American Recovery and Reinvestment Act, first-time homebuyers who purchase a property before Dec. 1 can receive 10 percent of the price, up to $8,000, back as a tax credit.
The catch is that many potential buyers don't have enough money to cover the down payment to buy a home and obtain the credit. But if they could qualify, they could, in theory, find a way to make a purchase and get the credit.

CHFA's JumpStart program breaks the trap by lending up to $6,000 or 3.5 percent of a home's purchase price, whichever is less, to cover closing and down-payment costs.
That second mortgage comes with no interest and no payments due until June 30, 2010. CHFA also will provide a 30- year, fixed- rate first mortgage to qualified borrowers.

"First-time homebuyers will be able to leverage the future benefit of the federal tax credit by working with CHFA to access the dollars needed to buy a home today," said U.S. Rep. Ed Perlmutter, D-Colo., who helped unveil the program.

Borrowers are expected to use their tax credit to repay the second mortgage before the June 30 deadline. If they don't, the loan becomes payable over 10 years at 8 percent interest.
"If you don't plan to pay off the second mortgage with the tax credit, then CHFA JumpStart isn't for you," said Karen Harkin, CHFA's director of home finance.
Buyers must also contribute $1,000 of their own money and take a homebuyer education course.
CHFA expects the program to help as many as 1,250 families this year, but Harkin said CHFA would do its best to help as many people as are qualified. "We will find funding for every homebuyer who wants to participate," she said.

The offer, for now, is for a limited time. Perlmutter was noncommittal on whether Congress would renew the first-time home purchase credit for next year.
He said it would depend on the condition of housing markets, with no decision likely until later this year.

Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com