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CHFA down payment program not affected by IRA ruling
An upcoming IRS ruling that will affect certain down payment programs has no
bearing on the down payment program offered by the Colorado Housing and Finance
Authority (CHFA).
Last week, the IRS announced that in an upcoming ruling, they will describe
under what circumstances an organization that provides down payment assistance
qualifies as a tax exempt charity, Federal regulations limit the sources of down
payment assistance for FHA loans, and tax-exempt charities are one qualified
provider. The ruling will likely affect the ability of down payment programs
such as Nehemiah to provide down payment assistance.
CHFA’s down payment assistance program is not affected by the IRS ruling
since CHFA’s down payment assistance is not in the form of a gift, but instead
is an interest-free second mortgage loan. In addition, CHFA is allowed to
provide down payment assistance under Federal regulations because it is a
political subdivision of the state, and therefore qualifies as a public entity.
“CHFA will continue to offer its exceptional 30-year fixed interest rate
mortgage loan program along with the optional zero interest second mortgage for
down payment and closing costs,” said Karen Harkin, CHFA Home Finance director.
“This program has provided thousands of low- and moderate-income families the
opportunity for home ownership over the years. It really is one of the best
deals around for first-time homebuyers.”
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