Homebuyer Frequently Asked Questions

Chenoa Fund™ is a national down payment assistance program provided by CBC Mortgage Agency, a federally chartered governmental entity. The Chenoa Fund™ program is designed to increase access to homeownership for creditworthy families.

At CBC Mortgage Agency, it’s our core belief that everyone in America deserves access to affordable housing and it’s our mission to help make that happen. We provide tools that open the doors to home ownership for individuals who have the income and credit history to afford a home but may lack the ability to accumulate a down payment. CBC Mortgage Agency partners with reputable mortgage lenders on a correspondent basis to provide down payment assistance for qualified homebuyers in the form of second mortgages.

Homeownership isn’t for everyone—but housing is. While we have minimum credit scores and debt-to-income ratio restrictions that may put some borrowers out of the reach of our direct assistance, we believe that we can reduce the competition for rental housing by assisting creditworthy families to overcome barriers, which in turn helps to reduce the cost of renting and increase its availability for those we cannot assist directly.

The Chenoa Fund™ program has served the U.S. first-time homebuyer market in a significant way, having completed more than 10,000 mortgage transactions since 2013.

Under the Chenoa Fund™ program, buyers who meet our eligibility criteria may receive a second mortgage to cover their 3.5% minimum down payment requirement when purchasing an FHA-insured home or the 3% minimum down payment required on a FNMA conventional loan. We believe that by helping responsible homebuyers meet that minimum investment required for a mortgage we create healthier communities by improving the balance between homeownership and other housing types.

Most first time buyers manage to purchase a home by saving for a down payment over a period of years, or perhaps by receiving gifts from parents or other family members. But increasing home prices and stagnant or low wages can make this process difficult, and many Americans lack the earning power to reach that home buying mark. As a result, they have no way to break into homeownership and reap its economic benefits for themselves and for their children.

Studies reveal that many would-be buyers have the income and credit history to qualify for a loan but they lack sufficient savings for a down payment. This barrier is often the most significant economic obstacle for families seeking to transition from renting to sustainable homeownership, and the consistent availability of down payment assistance programs can make all the difference for more U.S. families.

Homeownership rates have decreased over the last ten years and this decline was most dramatic among minority households, millennials, and single-parent households. The need for down payment assistance is greater than ever.

We believe in helping people buy now (if they credit qualify) so they can begin building up equity today.

In a 2017 survey taken by the Urban Institute and the Federal Reserve¹, 53% of renters stated that they continued to rent because of their inability to afford a down payment.

Another Urban Institute survey, conducted with Fannie Mae, reports that down payment assistance and lower down payment mortgages have become increasingly critical to the health of the housing market. Minorities are especially in need of assistance, as many do not have family who can help them buy their first home. Without assistance, most will not become homeowners.

Chenoa Fund™ is a down payment assistance program provided by CBC Mortgage Agency. Under this program, buyers who meet certain eligibility criteria may receive a second mortgage to cover the minimum down payment requirement when purchasing an FHA-insured or FNMA conventional loan. By helping homebuyers responsibly meet that minimum investment required for a mortgage, we create healthier communities by improving the balance between homeownership and other housing types. Homeownership is the number one creator of household wealth.

CBC Mortgage Agency is accountable to FHA. FHA has strict guidelines under which down payment assistance programs are administered. CBC Mortgage Agency carefully reviews every loan to ensure borrower success. All borrowers receive post-purchase counseling to ensure the transition to homeownership is successful.

¹ NCSHA Blog: Urban Institute Report Touts Importance of HFA Down Payment Assistance Programs, November 17, 2017

Not when done correctly (although there is always risk involved when creating a loan). CBC Mortgage Agency, the provider of the Chenoa Fund™ program, is an approved governmental lender and strictly adheres to all FHA guidelines. The Chenoa Fund™ program is designed to assist borrowers who are qualified and capable of undertaking homeownership. For one thing, borrowers must meet our minimum credit score requirements, which are higher than the credit score allowed by FHA. In an effort to minimize risk to the FHA insurance fund, we also provide pre-purchase homebuyer education to those who need it and education and counseling for all borrowers during their first eighteen months of homeownership. In addition, borrowers who use our program are better able to handle unexpected costs during the critical first years of homeownership because they are able to keep what savings they have.

Through the Chenoa Fund™ program, CBC Mortgage Agency offers one set of flexible guidelines across the nation, reducing the burden lenders currently face by administering multiple programs.

CBC Mortgage Agency also offers, generally speaking, better pricing, allowing better terms to the borrower. In addition, we have the ability to help more borrowers due to flexible income, geographic, 1st time homebuyer, and other restrictions in place with most programs.

The Chenoa Fund™ program includes several second lien products that are issued in conjunction with first mortgages that are either FHA-insured or FNMA conventional loans. They include:

• Rate Advantage
• DPA Edge (Repayable Second or Soft Second)
• HomeReady
• Standard Conventional
  • This DPA product may be paired with either a FNMA Standard Conventional (90–95% LTV) or Conventional 97 loan

Chenoa Fund™ down payment assistance 2^nd liens may be used in conjunction with either an FHA-insured 1^st mortgage or FNMA conventional 1^st mortgage financing so long as the first mortgage adheres to applicable underwriting guidelines. Down payment assistance paired with an FHA mortgage has an option of 3.5% or 5% of the lower of the purchase price or appraised value.

CBC Mortgage Agency provides a second mortgage in an amount of 3% or 5% of the lower of the purchase price or appraised value to meet the down payment requirement for a 90–97% LTV conventional Loan. Borrowers receiving this assistance must meet the guidelines outlined for the relevant Fannie Mae™ program (HomeReady^®1*, Standard Conventional [90–95% LTV], or Conventional 97).

^*Neither CBC Mortgage Agency nor Chenoa Fund™ and any of its products are approved by or affiliated with Fannie Mae. It is the originating lender’s responsibility to ensure that the use of a CBC Mortgage Agency second mortgage in conjunction with the originating lender’s 1^st mortgage is compliant with Fannie Mae requirements.

CBC Mortgage Agency can only offer CBC Mortgage Agency 2^nd mortgages in conjunction with a lender’s conventional 1^st mortgage loan when the lender is FNMA-approved and has the ability to run DU^®2.

A more detailed breakdown of the Chenoa Fund™ products can be found here.

¹HomeReady^® is a registered trademark of Fannie Mae.
²DU^® is a registered trademark of Fannie Mae.

A leading non-profit homebuyer counseling agency based in Houston, TX, known as Money Management International (welcome.moneymanagement.org) works closely with CBC Mortgage Agency on a QA and Homebuyer Education initiative. Money Management International (MMI) provides financial education for first-time homebuyers receiving Chenoa Fund™ down payment assistance to ensure that new homeowners understand the importance of making their mortgage payments on time. This education component is part of an overall lending strategy developed by MMI to help CBC Mortgage Agency’s borrowers sustain homeownership while simultaneously improving loan performance measures in an effort to maintain the financial soundness of the FHA insurance program.

The MMI/CBC Mortgage Agency outreach and education program engages all new CBC Mortgage Agency homeowners each month during the first eighteen months of homeownership. Each homeowner receives financial advice targeted to their specific needs from a HUD-approved nonprofit housing counselor with the goal of helping them make their mortgage payments on time. The counselor will also teach customers how to build a budget, save money for home repairs, and other steps needed to maintain responsible homeownership.

MMI also may counsel with borrowers with a credit score lower than 640 prior to purchase to ensure they are prepared for the challenges of homeownership. Borrowers with a credit score lower than 620 are required to take an education course through MMI prior to closing.

Yes. In 2017 the National Association of Realtors¹ released a study entitled, “Social Benefits of Homeownership and Stable Housing.” The findings revealed that:

• Homeowners are generally in better health than renters.
• Increases in housing wealth were associated with better health outcomes for homeowners.
• Low-income people who recently became homeowners reported higher life satisfaction, higher self-esteem, and higher perceived control over their lives. For example, homeowners are more likely to believe that they can do things as well as anyone else and they report higher self-ratings on their physical health even after allowing for age and socioeconomic factors.
  Renters who become homeowners not only experience a significant increase in housing satisfaction but also obtain a higher satisfaction even in the same home in which they previously resided as renters.
• Social mobility variables, such as the family financial situation and housing tenure during childhood and adulthood, impacted one’s self-rated health.
• Homeowners have a significant effect on their children’s success. The decision to stay in school by teenage students is higher for those raised by home-owning parents compared to those in renter households.
• Students from low- and middle-income families are much more likely to enroll in college when their families experienced gains in housing wealth.

¹ National Association of Realtors: Social Benefits of Homeownership and Stable Housing, November 17, 2017

As a governmental entity, CBC Mortgage Agency is invested in the success of the borrowers utilizing the Chenoa Fund™ program. CBC Mortgage Agency takes great care in not just making sure that borrowers can qualify for a home but that they become successful long-term homeowners. Borrowers needing extra support receive pre-purchase counseling and all borrowers are given outreach and counseling for the first 18 months after the purchase of their new home to help them to successfully navigate the challenges of owning a home, many for the first time.

Homeowners may experience benefits such as:

• Predictable monthly housing payments. Renters experience an average of 3.5% increase in rent each year. Landlords can raise rent whenever a lease expires. It’s not uncommon for renters to be priced out of rentals. Homebuyers are able to secure a predictable mortgage payment (i.e., principal and interest) for up to 30 years. In addition, the principal payment builds equity.
• Savings and Equity. Most homeowners are better able to accumulate savings that will be available when needed, such as family emergencies, saving for a child’s education, and ensuring a secure retirement. When a homebuyer owns a home, chances are the homebuyer’s equity will grow over time. Conversely, families forced to sink a large proportion of their income into annually increasing rents struggle to build savings, a reality that leaves many in a precarious financial situation. Homebuyers should consult their investment advisor to determine whether there may be financial advantages for them.
• Tax benefits. Even with recent changes in tax laws, interest from a home mortgage is still deductible for the vast majority of new homeowners. Homebuyers should consult their tax professional to determine whether there may be tax benefits for them.
• Ability to make the home your own. Homeowners are able to make the home uniquely theirs. Paint a wall, change the carpet, add a cabinet, hang a picture where they want. With rentals, it is at the discretion of the landlord of what they can and can’t do.
• More affordable monthly payments. According to a 2017 RealtyTrac¹ study, in 66% of the markets studied it is more affordable to buy than to rent. Sure, there’s the upfront cost of the down payment and closing costs, but the Chenoa Fund™ program can help with the down payment (and a portion of the closing costs, in some instances), while a seller of a home may help with the closing costs.
• Community connections. Homebuyers are more likely to become invested in the community when they own the home, caring about how taxes are invested in neighborhoods, schools, and organizations. Homebuyers plant roots, make friends, and share experiences cheering for their children’s teams or simply talking with their neighbors about the simple pleasures of the day. This sense of community results in healthier children, lower crime, and improved neighborhoods.

¹ Attom Data Solutions: Buying More Affordable than Renting in 66 Percent of U.S. Housing Markets