Renters can face big hurdles when they decide to become homeowners. One of the biggest is saving up for a down payment. With constantly changing economic environments and employment uncertainty, people are facing difficult decisions about how to use or presersve their savings. Home Purchase and Refinance Loans

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Chenoa Fund Provides Down Payment Assistance Nationwide

July 14, 2022

One of the biggest hurdles that renters face today when they want to transition to becoming homeowners is saving up enough cash for a down payment. With constantly changing economic environments and employment uncertainty, many more homebuyers are having to make the difficult decision to utilize their savings.  

The Down Payment Problem 

The mortgage industry has always looked for ways to make homebuying more accessible for the American public, but tackling the down payment requirements has not always been easy. While the FHA allows borrowers to use gift funds to pay the minimum 3.5% down payment, it is not enough for many low- and moderate-income families. Seller-funded down payment assistance (DPA) - where sellers absorb the down payment for buyers in exchange for a much higher price on the home - became a problem that put many families into mortgage debt they could not sustain. This led to the Housing and Economic Recovery Act of 2008, which prohibited such programs, but still left a major void for funding that would-be homebuyers needed.  

The Chenoa Fund 

Luckily, borrowers have an opportunity with Down Payment Assistant programs that are funded locally or statewide, which have been extremely helpful to get help to families who need it most. There is one DPA program that currently is available nationwide (excluding New York) known as the Chenoa Fund DPA Edge Program. Funded by the CBC Mortgage Agency, this program offers the ability to utilize an FHA-insured home loan by offering eligible applicants 3.5% of the purchase price to cover the down-payment. The assistance funds come in the form of a zero-interest second mortgage with a 30-year term. This second mortgage will be forgiven if the borrower makes 36 consecutive, on-time payments on the first mortgage. 

If the borrower misses a payment at any point during the 36-month period, the timer resets; the borrower will have to start over with another 36 months to make those on-time payments. If borrowers cannot meet this goal, they will owe the full amount of the second mortgage to CBC Mortgage Agency at the end of the 30-year term. 

With the current Coronavirus pandemic, and consequent unemployment, many Chenoa Fund recipients worried they would not be able to make their payments on time and that they would miss out on this loan-forgiveness opportunity. When more and more borrowers filed for unemployment, the CBC Mortgage Agency ensured that borrowers experiencing loss of income would not miss out on this feature.   

The Upside to Down Payment Assistance Programs 

In addition to the Chenoa Fund, there are over 2,500 privately and government-funded DPA programs, nationwide. has done in-depth research of over 130+ of these down payment assistance programs and/or grants. Please note that all programs listed on our pages may involve a second mortgage with payments that are forgiven, deferred, or subsidized in some manner until resale of the mortgaged property. 

This is not a complete list, but it can serve as a starting point in your search for the best down payment assistance program or grant for your situation. It is up to the consumer or their loan officer to contact these entities directly and find out the specifics of each program. 

What makes DPA programs especially beneficial to a potential homebuyer is when they are offered in conjunction with other programs or with the condition of meeting other requirements. For example, many DPA programs require borrowers to complete financial and homeowning education courses, or have a certain amount of cash in reserve. In doing so, DPA programs do not just help Americans purchase homes, but give them the tools to be responsible homeowners. 


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