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Many aspiring homeowners struggle to save for a down payment, which is why programs like the Chenoa Fund Down Payment Assistance are essential. The Chenoa Fund is a nationwide down payment assistance (DPA) program that helps homebuyers cover up to 3.5% or 5% of their FHA mortgage down payment. Keep reading to learn how Chenoa Fund Down Payment Assistance works, who qualifies, and what program options and rates are available to make homebuying more affordable.
→ Read more: What Is an FHA 203k Loan? Complete Beginner’s Guide
What is the Chenoa Fund Down Payment Assistance Program?
Administered by CBC Mortgage Agency, the Chenoa Fund Down Payment Assistance helps low- and moderate-income borrowers, first-time and repeat buyers, and underserved communities overcome down payment challenges. Unlike a grant, the Chenoa Fund provides a second mortgage loan that serves as down payment assistance under FHA guidelines.
Key Benefits of the Chenoa Fund Down Payment Assistance:
- Low or $0 Down Payment - Cover up to 3.5% (or even 5%) of your FHA down payment, drastically lowering your upfront costs.
- Competitive Interest Rates - Choose between a 0% interest forgivable second mortgage or a repayable loan at approximately 1% above your FHA first mortgage rate.
- Flexible Credit Requirements - Qualify for the Chenoa Fund with FICO scores as low as 600 to 620, making down payment assistance accessible even with less-than-perfect credit.
- Forgivable & Repayable Options - Choose between a soft-second loan forgiven after three to ten years of timely payments or a repayable second mortgage with a low-cost 10-year term.
- Nationwide Availability - The Chenoa Fund Down Payment Assistance is available in all U.S. states except New York, with consistent guidelines and no annual funding caps.
- Open to All Buyers - No first-time homebuyer requirement and broad income limits make the program accessible to many borrowers.
- Partnered with Approved Lenders - Applications must be submitted through CBC Mortgage Agency’s approved lenders to ensure a smooth, FHA-compliant loan process.
Who Qualifies for Chenoa Fund Assistance?
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The Chenoa Fund Down Payment Assistance program helps make homeownership more accessible, but homebuyers need to meet specific eligibility criteria. Here's everything you need to qualify:
1. Borrower Requirements
- Credit Score Minimum: The minimum credit score for Chenoa Fund loans is typically 600 (CBC’s official rule), although most Chenoa products on the market require 620 or higher. The Rate Advantage program requires 640, while the DPA Edge forgivable option allows 620.
- Debt-to-Income Ratio (DTI): Chenoa Fund sets DTI limits based on credit score ranges.
- 600 - 639: max 45% DTI
- 640 - 659: max 50% DTI
- 660+: DTI per AUS approval
- Homebuyer Education: Completing an approved homebuyer counseling course is mandatory to qualify for Chenoa assistance.
- Primary Residence Only: The home must be your main residence (no investment or second homes).
2. Property Requirements
- Property Types: Single-family homes, condos, townhomes, and approved manufactured homes.
- Location: Must be in an eligible area (most U.S. states participate)
- Loan Limits: Must conform to FHA loan limits for the county.
3. Income & Purchase Price Limits
- Income Limits:
- DPA Edge Repayable Second: No income limits.
- DPA Edge Soft Second (forgivable): ≤ 115% of area median income
- Rate Advantage: ≤ 135% of area median income
- Purchase Price Limits: Must be within local FHA limits (check HUD website).
4. Mortgage Requirements
- First Mortgage Must Be FHA: Chenoa Fund is a second lien
- Minimum Borrower Contribution: Often $0 (but some options require 1% down)
- Must Use Approved Lender: Not all lenders offer Chenoa Fund programs
Satisfying these opens the door to assistance. Note that first-time homebuyers status is not required; repeat buyers can use Chenoa too. CBC even reports that 90% of Chenoa users are first-timers, but the program is open to all who meet credit and occupancy rules.
→ Read more: FHA 203k Loan Reviews and Experiences
Two Chenoa Fund Options Available
Chenoa Fund offers two DPA options to suit different borrowers:
- Forgivable Second Mortgage: 30-year term, 0% interest, no monthly payments on the Chenoa. The Chenoa lien remains on the property, but the loan is forgiven over time. If the assistance was 3.5% of the purchase price, it is forgiven after 36 consecutive on-time FHA payments (about 3 years). If it were 5%, forgiveness comes after 120 on-time payments (10 years). The forgiveness period resets if the FHA mortgage payment is late (60+ days delinquent for the 5% option), but all borrowers have the full 30-year term to meet these conditions. In any case, any remaining Chenoa balance is forgiven at the end of 30 years. If the home is sold or refinanced before forgiveness, the Chenoa loan balance must be repaid.
- Repayable Second Mortgage: 10-year term, currently 1% above the FHA first mortgage rate (effective April 1, 2025; previously 2%). This is a standard second lien with an amortizing loan and required monthly payments. The borrower pays back principal and interest over 10 years. If the home is sold or refinanced before the 10-year term ends, any remaining balance is due.
These two “soft second” and “hard second” options give flexibility. The forgivable option effectively turns into a grant after the forgiveness period, while the repayable option must be paid back like a mini-mortgage. Both cover the FHA-required down payment.
Chenoa Fund Rates Today
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Because Chenoa’s repayable second mortgage rate is tied to the FHA first mortgage rate, it can change with market conditions. As of April 2025, the repayable second mortgage rate is 1% higher than the FHA rate. The forgivable second mortgage rate is 0% (no interest). For example, if today’s FHA rate is around 7.0%, a new Chenoa repayable loan would be about 8.0%. Actual interest rates may vary daily, so the best approach is to ask your lender for the current Chenoa rate at the time of loan locking. CBC provides lenders with a daily rate sheet.
Income Limits
Unlike many down payment programs, Chenoa Fund generally does not impose strict income caps on borrowers. According to CBC, “The Chenoa Fund down payment assistance program does not have income limits.” Practically, this means eligible families of varied incomes can apply, especially if using the repayable option. However, some specific Chenoa products (especially the forgivable edge loan and Rate Advantage) target lower-to-moderate incomes. For example:
- Rate Advantage and DPA Edge: Both have income caps of 115% of the area median income (AMI). (In many metros, 115% AMI is a household income limit in the upper range, not just “low income.”)
- Edge Repayable Second: No income limits.
- Single-family FHA loans: FHA itself has no borrower income restrictions beyond its own rules.
In summary, most Chenoa FHA products are available to middle-income families too. If your income is even moderately high, ask your lender about the Edge Repayable option, which will not exclude you.
How to Apply for the Chenoa Fund Down Payment Assistance
Applying for Chenoa assistance works like this:
- Get Pre-Approved - Work with a lender that participates in the Chenoa Fund program.
- Complete Homebuyer Education - a required step to qualify.
- Find Your Home - Work with a real estate agent to select a property.
- Finalize Your Loan - Your lender will help secure the Chenoa Fund DPA alongside your mortgage.
→ Read more: How to Apply for an FHA 203k Loan
Why Choose Loan Factory for Your Home Loan?
- Custom Roadmap to Homeownership
We craft a step-by-step plan that fits your budget and timeline. - Chenoa Fund Insiders
Our team knows every twist and turn of Chenoa DPA and can check whether you qualify for 3.5% to 5% down payment assistance through the Chenoa Fund. - Maximized Down Payment Assistance
We help you access your available Chenoa Fund assistance based on your eligibility, so you can preserve more of your own savings. - Competitive FHA Rates
We shop multiple lenders to find the competitive FHA rate, then add just a 1% margin for your Chenoa repayable loan. - Streamlined Process
From pre-approval through closing, we handle the paperwork, lender coordination, and underwriting details. - No Hidden Surprises
Clear communication on fees, timelines, and requirements - so you know exactly what to expect.
→ Read more: Top Loan Officers Near Me: Get Local Help
Ready to buy a home with little to no down payment?
If you or someone you know worries, “Can I really afford a home with just 3.5% down?”, the answer is yes, with help from Chenoa.
The assistance program helps many homebuyers cover upfront costs. With flexible repayment options and access to second mortgage programs, it may make homeownership more attainable for qualified borrowers.
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Contact Loan Factory today at (714) 444-9999 or visit our website at www.LoanFactory.com.
FAQs of the Chenoa Fund Down Payment Assistance Program
Can I use Chenoa Fund assistance in any state?
Yes. It’s a nationwide program (all states except NY), so long as your lender participates.
Do I have to repay Chenoa money?
It depends on the loan type. Forgivable loans need no repayment after the forgiveness period. Repayable loans must be repaid according to their term (often 10 or 30 years).
Are there income limits?
As noted, the Chenoa Fund typically has no income cap on its primary programs, though certain options may limit help to households up to ~115% of the area median income.
What credit score do I need?
At least 600 is required. Many Chenoa loans ask for 620 - 640+, but options exist down to 600.
What about Chenoa Fund-approved lenders?
Yes - you must use a Chenoa-approved lender (over 200 in the U.S.). Check CBC Mortgage Agency’s website for a list or ask your mortgage broker.
Can I combine Chenoa with other grants?
Possibly. For FHA loans, Chenoa covers the down payment, and you may still use seller concessions or other closing-cost programs as allowed by FHA guidelines. Always discuss combos with your lender.
Take the first step toward stress-free homebuying - contact Loan Factory now, and let’s get you the keys to your new home!
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Disclaimer: The information in this article is provided for general informational purposes only and does not constitute financial, legal, or tax advice.
