3% Down Payment with No Mortgage Insurance

3 Percent Down Payment No Mortgage Insurance









What is this loan program?

The 3% down payment with no mortgage insurance home loan is a conventional loan called CHFA Advantage℠.

This program offers some obvious benefits with a very low down payment and the extra advantage of no mortgage insurance.

However, the benefits do come at a cost with a higher than market average rate and additional closing costs.

To see if this loan program makes sense for you, you will need to weigh the cost and benefits compared to other loan programs.

For a free loan analysis please email Sean.Young@nafinc.com or call 303-521-7169.


Answers to Commonly Asked Questions:


What is the minimum credit score?

Must have a minimum middle credit score of 680+


What is the minimum down payment?

3% of course, with a maximum loan to value (LTV) of 97% on a single family, one-unit, condo or townhome, attached or detached.

Manufactured requires a 5% down payment.


Can the 3% be a gift?

Yes, the 3% can be a gift from a family member.


What is the max loan amount?

The max loan amount for this program is $453,100.

The max loan amount cannot go over $453,100 on this program.

Click here to view the entire list of county loan limits.


What are the loan terms?

30-year fixed is the only term available. No terms below 30 are allowed and no ARM’s are allowed.


What type of property is eligible?

You can finance a one-unit single-family home attached or detached, townhomes, condos, Planned Unit Developments (PUD). No Duplex allowed.

Manufactured is allowed if the property is on a permanent foundation, built after 1976, other requirements may also apply.


Can I do this loan as an investment property?

No, it is only for owner-occupied.


Can I get this loan if I own other properties?

Yes, you can have an ownership interest in one other residential property at the time of the loan closing as permitted by Fannie Mae.


Can I use a Cosigner?

No, you cannot use a Cosigner or a non-occupying Co-Borrower. You can have a co-borrower who will be living in the property.


What is the max Debt to Income ratio?

The maximum debt to income (DTI) ratio is based on the results/findings of the Automated Underwriting System through Desktop Underwriting (DU). Fannie Mae usually allows up to 45% with a middle credit score under 700 and up to 50% with a middle credit score over 700. However, it does depend on the results of DU.


Do I have to be a first-time homebuyer?

No, you don’t have to be a first-time homebuyer.


Do I still have to take a Homebuyer Education class?

Yes, CHFA requires that you complete a CHFA approved Homebuyer Education course. This can be taken online or at a live local class.


Where can I finish my homebuyer education class?

There are many great places you can take this class for Free. Below are a few, you can visit the below links or I can help you schedule a class.

You can also do an online class at eHomeAmerica for a $99 charge. If you get a code they will give you a slight discount for the 2nd person.

Click here for a list of all HUD-approved housing counseling agencies in Colorado.

Always make sure to show up on time and to keep a copy of your certificate.


Is there an income limit for this program?

Yes, there is a max income limit per county and is based on a 1-2 household and 3+ household, and if the property is in a targeted or non-targeted area.

For example:

Denver County 1-2 person household, max income is $83,900 in a non-targeted area.

Denver County 3+ person household, max income is $96,400 in a non-targeted area.

Denver County 1-2 person household, max income is $100,600 in a targeted area.

Denver County 3+ person household, max income is $117,400 in a targeted area.

For the complete list of income limits by county click here.


What is a non-targeted and targeted area?

A targeted area is an economically distressed area designated by the U.S. Department of Housing and Urban Development (HUD).

Special incentives are given for applicants purchasing homes in federally designated Targeted Areas. Some of these incentives are:

  • You can make more income and purchase more home since the Household Income and home Purchase Price Limits are higher. Click here to see Household Income and Purchase Price Limits per county.
  • Mortgage Credit Certificates are available for non-first time homebuyers if they are buying a home in a Targeted Area.

 For more information on non-targeted and targeted areas click here


 This sounds too good to be true, what’s the catch?

1: The rate is higher than a typical conventional or FHA loan with mortgage insurance because they calculate the cost of having no MI and it is part of the rate.

2: The closing costs are higher than a typical conventional or FHA loan. The reason is that there is an additional 1% origination for this loan.

3: It takes an additional week to close this loan because after our underwriter approves the loan the file then requires CHFA to review it to make sure all the paperwork is correct.

So the benefit is that it is only 3% down with no mortgage insurance and the cost is a slightly higher rate and higher closing costs.

That is why it is important to run the numbers with your loan officer to see what option is best.


Can I buy down the interest rate?

No, CHFA does not allow buying down the interest rate. The rate is posted daily on their website and everyone gets the exact same rate. It does not matter if your credit score is 680 or 850, everyone receives the same rate.


How does this loan compare to an FHA loan?

FHA is different for the following reasons:

  • 3.5% minimum down payment
  • Up front mortgage insurance of 1.75% of the loan amount added to the loan amount.

For example:

Purchase price $200,000 – 3.5% ($7,000) = $193,000 x 1.75% ($3,377) UFMIP = $196,377

  • Annual (monthly) mortgage insurance of 0.85% at 95.01 LTV or higher or 0.80% at 95.00 LTV or below. Plus, FHA MI is for the life of the loan. Only way to get rid of it is to refinance out of it.
  • FHA interest rates are usually much lower than a CHFA Advantage℠.

How long does it take to close?

The typical time to close a CHFA Advantage℠ is around 3 to 4 weeks. However, this truly depends on how quickly you turn in the required documents and how quickly you respond when additional items might be needed or questions answered.


Can anyone do a CHFA loan?

No, CHFA requires its Participating Lenders to:

  • Originate loans from an office physically located in Colorado.
  • Perform credit underwriting on all loans.
  • Ensure that all staff (and any third party contractors) be knowledgeable about the various aspects of mortgage loan origination, mortgage loan sales, and mortgage loan servicing, as is applicable to their position within the lender organization.
  • Use sound business judgment in all aspects of its operations.
  • Demonstrate a commitment to providing sound financing options to low and moderate income homebuyers in Colorado.
  • Protect the homebuyers from fraud, misrepresentation, and/or negligence by any of its staff or third party contractors involved in the origination process.
  • Have written business practices and procedures that are designed to avoid predatory lending practices, regardless of whether or not the Participating Lender utilizes an automated underwriting system, underwriting staff, or private mortgage insurance contract underwriters to perform credit underwriting functions.
  • Maintain minimum production requirements.
  • Have the financial ability to fund loans at closing.

What is the MCC?

The Mortgage Credit Certificate is an awesome way for you to reduce the amount of federal taxes you owe by claiming 20% of your mortgage interest as a tax credit on your tax return every single year.

  • MCC holders may claim 20 percent of the paid mortgage interest on their first mortgage.
  • The remaining percentage continues to qualify as an itemized tax deduction.
  • The MCC is in effect every year for the life of the first mortgage loan.

To Qualify:

  • Must have a mid credit score of 620 or higher (CHFA Advantage℠ requires 680).
  • Must be on your owner-occupied principal residence.
  • Be a first-time homebuyer (3-year rule) or an eligible veteran or non-first time. homebuyer purchasing in a targeted area.
  • Meet income and home purchase price limits.
  • Take a homebuyer education class (online or in-person) prior to loan closing.

When does the MCC expire?

The MCC does not expire as long as the home remains your principal residence and you are paying mortgage interest. It will expire only when you sell or no longer use the house as your primary residence. If you do refinance, you may be able to get your MCC reissued. If you sell your home in the first nine years, you may be subject to the Federal Recapture Tax.


How much of a tax credit can be claimed under the MCC program?

The size of the annual tax credit will be a percentage of the annual interest paid on the mortgage loan. The credit cannot be larger than the annual federal income tax liability after all, other credits and deductions have been taken into account. MCC credits in excess of the current year tax liability may, however, be carried forward for use in the subsequent three years.

MCC information obtained from:



Can I get a CHFA Advantage℠ as a Refinance?

Yes, you just need to have at least 3% equity in the property and all of the above still applies.

  • No mortgage insurance
  • 97% LTV, 3% equity minimum
  • 680 middle credit score or above
  • Must meet income and purchase price limits as stated above.

Who and what is CHFA?

CHFA stands for Colorado Housing Finance Authority and they are a state Housing Finance Agency established in Colorado since 1973 by the Colorado Legislature to address the shortage of affordable housing in the state.


Does CHFA provide the financing?

No, CHFA does not lend money directly to consumers. They use approved Participating Lenders to qualify consumers and make all mortgage loans.

New American Funding is a Participating Lender.


How can I apply for this loan?

You have three options.

1: Apply online by clicking here

2: Apply over the phone by calling 303-521-7169.

3: Make an appointment and apply in person, face to face.


Sean Young
Mortgage Loan Officer
NMLS: 191647
Phone: 303-521-7169
Email: Sean.Young@nafinc.com
New American Funding



MyLenderSean.com is not a lender, but is the domain name and blog website for loan officer Sean Young (NMLS 191647 / LMB 100013240) who is an employee of Broker Solutions, Inc. DBA New American Funding an Equal Housing Lender licensed through NMLS 6606.
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