The median list price for a home in Connecticut has continued to rise since the beginning of the year, from $414,975 in November 2022 up to $469,000 in November 2022, although that figure is down from a peak of $482,500 in June, according to data from Realtor.com.
Not all hope is lost. First-time homebuyer programs can be the solution, as they provide eligible homebuyers with financial assistance to cover things like closing costs and down payments.
What Are Today’s Mortgage Rates in Connecticut?
For Thursday, January 26, 2023, here are the current mortgage rates in Connecticut. The average 30-year fixed mortgage rate is 6.370%. The average 30-year fixed mortgage refinance rate is 6.420%. Today, the average 15-year fixed mortgage rate is 5.620%.
Looking at variable rate loans, the average 5/1 adjustable-rate mortgage (ARM) rate is 5.040%.
This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.
Current Mortgage Rates in Connecticut
How Much of a Mortgage You Need to Buy a Home in Connecticut
Less common loans include jumbo loans and VA loans. If you’re looking to borrow an amount that exceeds conforming loan limits, you’ll likely need anywhere from 10% to 20%, although this requirement can vary depending on the lender. And if you have some form of qualifying military service, VA loans do not require any down payment whatsoever.
|Metro Area||Typical Home Value||3.5%||10%||20%|
Types of Home Loans Available in Connecticut
As a homebuyer in Connecticut, you’ll have many types of home loans to choose from. Not every lender offers the same choices, however, and each type of loan has its pros and cons. Shop multiple lenders to help find the best loan for your situation.
For borrowers with good credit and income, a conventional mortgage loan is typically a good starting point. Compared to many other types of loans, conventional loans often provide the most competitive rates and fees.
Although you can qualify with as little as a 3% down payment, you’ll need 20% to avoid the added monthly expense of private mortgage insurance. With a credit score of at least 620 and a debt-to-income ratio below 45%, you should stand a good chance of being approved.
FHA loans are insured by the Federal Housing Administration and can be a good alternative to conventional loans for borrowers with lower credit scores or other blemishes on their credit report. With a 10% down payment, FHA allows credit scores as low as 500. If you don’t have 10%, you’ll need at least a credit score of 580 for the minimum 3.5% required down payment.
While FHA loans have more flexibility when it comes to credit requirements, they do tend to be more expensive. Not only can FHA rates and closing costs be higher than conventional loans, but FHA loans also require mortgage insurance. This mortgage insurance must be paid both as a one-time fee for obtaining the loan, as well as ongoing monthly mortgage insurance premiums.
VA loans are advantageous in that there is no down payment required and no mortgage insurance. However, VA loans are not open to everyone, as you’ll need to have some form of qualifying military service.
VA loans are insured by the Department of Veterans Affairs. Unlike other types of loans, the VA does not have a standardized set of loan requirements. Rather, specific loan requirements are determined by each individual lender.
First-Time Homebuyer Programs in Connecticut
If you are concerned you might not be able to afford a home, you should consider first-time homebuyer programs. If you’re eligible, these programs can provide a significant amount of financial assistance to help pay for things like closing costs and down payment requirements.
If you’re looking to buy a home in Connecticut, here are just a few of the programs offered through the Connecticut Housing Finance Authority (CHFA):
- HFA Advantage and HFA Preferred Loans: These programs can reduce the monthly expenses associated with mortgage insurance premiums. Unless you are purchasing a home in a targeted area, you’ll need to be a first-time homeowner purchasing a primary residence within CHFA sales price limits, and must also meet income limits.
- Homebuyer Mortgage Program: The Homebuyer Mortgage Program can provide below-market interest rates. With the exception of those purchasing a home in a targeted area, eligible borrowers must be a first-time homeowner purchasing a primary residence, and must complete a homebuyer education course prior to closing.
- Down Payment Assistance Program (DAP): The Down Payment Assistance Program is a second mortgage on the home, and can be used to help cover the down payment and closing costs. To be eligible, you must find a CHFA-participating lender and complete a homebuyer education course. DAP loans must be at least $3,000, and may not exceed the minimum down payment required for the home.
- Time To Own (Forgivable Down Payment Assistance Program): This is a limited-time program that can help cover down payment and closing costs. This loan comes with a 0% interest rate, requires no monthly payments, and allows for 10% of the balance to be forgiven each year. Eligible borrowers must also obtain a CHFA first mortgage and show residency in the state of Connecticut for the prior three years. And unless the home being purchased is located in a targeted area, you must be a first-time homebuyer.
- Special Discounts for Qualifying Professions: To encourage a higher percentage of homeownership, the CHFA also provides an additional 0.15% reduction on published interest rates for veterans, peace officers, teachers, residents of public housing purchasing a home, or those who are disabled or live with a disabled household member.
Not all funds received from a first-time homebuyer program need to be paid back. Some programs allow the loan to be forgiven if certain conditions are met.