How to Get Chenoa Fund Down Payment Assistance

March 8, 2024 - 8 min read

The Chenoa Fund helps close the home affordability gap

Excited about owning a home but lacking the necessary funds?

Down payment assistance can help. DPA programs provide grants or loans that can be applied toward your down payment and closing costs.

One popular option is Chenoa Fund. The Chenoa Fund down payment assistance program provides up to 3.5% of your purchase price — which could cover your whole down payment if you’re using an FHA loan.

But, only certain homeowners will qualify for Chenoa Fund assistance. Find out if you’re one of them.

Verify your home buying eligibility

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What is the Chenoa Fund?

Chenoa Fund is a nationwide down payment assistance program that aims to make housing more affordable.

That’s especially true for low- to moderate-income buyers, and first-time home buyers. However, the program isn’t limited to these groups. All applicants who meet the minimum requirements and program guidelines may be eligible.

The Chenoa Fund is administered by CBC Mortgage Agency (CBCMA), a federally chartered governmental entity.

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How much down payment assistance is available?

Chenoa Fund provides down payment assistance (DPA) between 3.5% to 5% of the buyer’s home purchase price. This aid comes in the form of forgivable or repayable second mortgage loan products.

Borrowers can use Chenoa Fund money with FHA mortgages and Fannie Mae conventional mortgages (though the conventional loan program is temporarily on hold at the time of this writing).

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The Chenoa Fund DPA program requires home buyers to work with an approved “correspondent” lender. That means if you hope to receive loan money from the Chenoa Fund, you’ll have to choose your mortgage lender from its list.

“Chenoa Fund is a great way for borrowers to...hold on to their savings for future emergencies, home improvements, or a rainy day.” —Miki Adams, Executive VP, CBCMA

The good news is that these approved lenders are given delegated underwriting authority. That makes it easy for lenders to use Chenoa Fund products.

Also, borrowers who receive this aid can combine it with seller concessions (within FHA guidelines) to help with closing costs.

“Chenoa Fund is a great way for borrowers to keep their savings when buying a home,” says Miki Adams, executive vice president for CBCMA.

“By using down payment assistance, they can hold on to their savings for future emergencies, home improvements, or a rainy day.”

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How Chenoa Fund DPA works with FHA loans

All Chenoa Fund loans may provide 3.5% to 5% down payment assistance. For FHA loans, this assistance must be put towards the down payment (not closing costs).

The neat thing is that FHA loans are available with only 3.5% of the home purchase price down. So a Chenoa Fund loan could potentially cover your entire down payment — leaving you to pay only closing costs out of pocket.

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The Chenoa Fund has three different programs that work with FHA loans:

Chenoa Fund Rate Advantage program

This is the most popular and successful Chenoa Fund product. It allows borrowers to lock in a competitive rate on their primary mortgage, as well as a 3.5% down payment assistance loan.

The loan has a minimum FICO requirement of 640 and a maximum debt-to-income (DTI) requirement of 50%. The income limit for this program is 135% of the area median income level in the county where the borrower will live.

The down payment loan itself has a term of 10 years and an interest rate of 8%.

Chenoa Fund DPA Edge

The Chenoa Fund DPA Edge is a ‘Soft Second’ mortgage. This option is quite popular among borrowers with lower income, because the funds used for a down payment are forgivable — meaning you typically don’t have to pay the loan back.

Borrowers with a FICO score of 620 or higher and a DTI of 45% or less can receive an interest-free second mortgage that requires no monthly payments. (The DTI requirement increases for higher FICO credit scores.)

This mortgage is forgiven after 36 months. But you have to make on-time payments (not more than 30 days late) on your primary mortgage for the loan to be forgiven.

If a borrower has a late payment, the 36-month period resets, giving the borrower another chance to have the loan forgiven.

Chenoa Fund’s DPA Edge program has an income limit of 115% of the area median income in the county where the borrower will live.

Chenoa Fund Edge Repayable Second product

With this option, there are no income limits to qualify for down payment assistance. Borrowers must have a minimum 620 FICO score and DTI maximum of 45% (this DTI requirement increases for higher FICO scores).

The Chenoa Fund Edge repayable loan also comes with two different terms you can choose from: 10 years at 0% interest, or 30 years at 5% interest.

How Chenoa Fund DPA works with conventional loans

Unfortunately, Chenoa Fund DPA for conventional home loans has been put on hold until further notice.

When it returns, this product will award financial assistance worth 3.5% of the purchase price. Unlike Chenoa Fund’s FHA product, DPA on conventional loans can be used in part for closing costs — but only after the down payment has been fully covered.

Conventional loan DPA from Chenoa Fund is used in conjunction with two Fannie Mae products: its HomeReady Mortgage and its standard conventional 97% LTV mortgage.

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Who qualifies for Chenoa Fund down payment assistance

If you’re using an FHA-backed mortgage, and want to apply Chenoa Fund down payment assistance, you need:

Verify your home buying eligibility

To qualify for conventional loan DPA (when it returns), you need:

  • A minimum FICO score of 640
  • A maximum debt-to-income ratio of 50%,
  • A second mortgage term of 10 years, and an interest rate not to exceed 2% above the first mortgage.

Thankfully, there are no income limits to qualify for Chenoa Fund assistance on a conventional loan.

Real estate attorney and Realtor Bruce Ailion is a fan of this program.

“The Chenoa Fund is focused on eliminating the obstacle of down payment funds for creditworthy low- to moderate-income peoples,” says Ailion.

Using Chenoa Fund to help buy a home is a “no brainer, especially compared to renting. Almost everyone can buy a home for less than the amount it takes to get into an apartment” —Bruce Ailion, Realtor

“Low- to moderate-income means less than 115% median family income for their area. And creditworthy means you’re able to qualify for an FHA or conventional loan.”

Ailion adds that using Chenoa Fund to help buy a home is a “no brainer, especially compared to renting. Almost everyone can buy a home for less than the amount it takes to get into an apartment with down payment assistance.”

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Other Chenoa Fund benefits

In addition to DPA, Chenoa Fund provides both pre- and post-purchase homebuyer counseling and homebuyer education courses to help ensure borrower success.

“Our Borrower Success Program was created to support new homeowners through the first full year of homeownership,” explains Adams.

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“Regular monthly check-ins with borrowers ensure any questions, challenges, or need for assistance are met with supportive, professional HUD-approved counselors.”

Also, Chenoa Fund does not rely on government subsidies and is entirely self-sufficient. It produces enough funds to continue to run and expand its DPA program and other efforts to improve homeownership.

“For example, a widening gap in the African American rate of homeownership versus whites continues to exist,” Adams says.

“To address this problem, CBCMA has teamed with the UHOUSI initiative to create and expand opportunities to increase homeownership within the African American community.”

Possible drawbacks

There are few disadvantages to pursuing Chenoa Fund assistance.

The main thing to consider is that most Chenoa Fund loans have to be repaid, except for its DPA Edge Soft Second loan.

Verify your home buying eligibility

So don’t just look at the Chenoa Fund — explore other DPA programs in your area, too.

Find out whether you qualify for a home buying grant or a forgivable loan. If you’re in line for money that doesn’t have to be paid back, there’s no reason not to take it.

On the flip side, the Chenoa Fund offers more generous assistance than many other down payment assistance programs. Not all will provide as much as 3.5% of the purchase price. And the Chenoa Fund’s ongoing homeowner counseling is a unique perk.

So even if the loan has to be repaid, the Chenoa Fund may be your best bet.

How to apply for Chenoa Fund loans

Chenoa Fund is offered through correspondent lenders.

“In other words, borrowers can apply for Chenoa Fund through a Chenoa Fund-approved lender,” Adams notes. “Many borrowers appreciate only needing one point of contact. That helps keep the loan process simple and smooth for them.”

To obtain a list of approved lenders, send an email to

You can also phone 866-563-3507 to speak with a Chenoa Fund corporate account executive. This person can help you connect with loan officers directly.

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Alternative forms of down payment assistance

Chenoa Fund programs aren’t the only options for DPA and closing cost aid.

Special programs for first-time buyers and other purchasers are available in every state. Visit the following online resources to search and apply for assistance you may be eligible for:

In addition, “speak to your lender about financing options,” suggests Adams.

“Sometimes a local DPA program might be a better fit than a Chenoa Fund product. It’s always wise to research all options and understand the terms being offered before deciding on a down payment assistance program or opting for DPA at all.”

Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.
Aleksandra Kadzielawski
Updated By: Aleksandra Kadzielawski
The Mortgage Reports Editor
Aleksandra is the Senior Editor at The Mortgage Reports, where she brings 10 years of experience in mortgage and real estate to help consumers discover the right path to homeownership. Aleksandra received a bachelor’s degree in finance from DePaul University. She is also a licensed real estate agent in Arizona and a member of the National Association of Realtors (NAR).