Buying your first home (or moving into your next primary residence) is an exciting milestone, but saving enough for a down payment can feel like the biggest obstacle. Between rising home prices and other financial priorities, many qualified buyers hesitate simply because they don’t have the upfront funds.
That’s where the Chenoa Fund, a national down payment assistance program administered by the CBC Mortgage Agency, comes in. The Chenoa Fund pairs with an FHA-insured mortgage and provides a second loan that covers your required down payment – and, in some cases, part of your closing costs.
At JVM Lending, our mortgage advisors help clients explore programs like the Chenoa Fund every day. We’ll explain how it works, who qualifies, and how to decide whether this program is the right fit for your homeownership goals.
What Is the Chenoa Fund and How Does It Work?
The Chenoa Fund® is a nationwide down payment assistance program designed to make homeownership more accessible for credit-qualified borrowers who need help with the upfront costs of buying a home.
It works by offering a second mortgage – typically 3.5 % or 5 % of the purchase price (or appraised value, whichever is less) – to cover your required FHA down payment. Depending on the version, this second mortgage may be forgivable or repayable.
| Type | Interest Rate / Term | Monthly Payment | Forgiveness / Repayment Rules |
|---|---|---|---|
| Forgivable Second Mortgage | 0 % interest, 30-year term | None | Forgiven after 36 consecutive on-time payments on the first mortgage for 3.5 % assistance or after 120 payments for 5 % assistance (no payments required on the second loan during this time). |
| Repayable Second Mortgage | Fixed interest rate – typically 1 % above the first mortgage rate (as of April 1, 2025) | Yes – monthly payments over 10 years or more | Fully repayable over the loan term; if you sell or refinance, the remaining balance must be repaid. |
Source: Chenoa Fund Program Guidelines – CBC Mortgage Agency, updated Feb 24 2025
- Chenoa Fund forgivable second mortgage: This option provides down payment help and, if you meet the conditions (such as making a set number of consecutive on-time payments on your first mortgage), that second loan may be forgiven (no monthly payments required).
- Chenoa Fund repayable second mortgage: In this version, you’ll repay the second mortgage over a set term, often 10 years, or sometimes longer.
The program is often used with a Chenoa Fund FHA loan, meaning the first mortgage is an FHA-insured loan and the Chenoa Fund assistance fills in the down payment gap. Because of the structure, borrowers can purchase a home with minimal savings while satisfying the FHA’s minimum down payment requirement.
The Chenoa Fund’s assistance is not a grant; it’s a second-lien mortgage designed to help eligible borrowers achieve homeownership sooner.
Eligibility Requirements for the Chenoa Fund
While program terms can vary by lender and state, here are the core eligibility factors based on the latest CBC Mortgage Agency guidelines:
- Credit Score: Minimum 600 for most FHA-based Chenoa products (although some lenders may require 620 or higher).
- Debt-to-Income Ratio (DTI): Typically up to 45 % of gross income (dependent on Automated Underwriting System approval and credit profile).
- Income Limits: Some versions limit income to ≤ 135 % of Area Median Income (AMI); others have no income cap.
- Residency: The property must be a primary residence (owner-occupied) – no investment properties allowed.
- Loan Type: Primarily paired with FHA-insured first mortgages; limited conventional options may exist.
- Approved Lender: You must work with a Chenoa-Fund-approved lender.
- Homebuyer Education: Required for certain versions (especially for first-time buyers or forgivable options).
Who Can Benefit from the Chenoa Fund?
You don’t have to be a first-time homebuyer to qualify. The program serves both first-time and repeat buyers as long as the new home is your primary residence.
Potential Benefits
- Covers the entire FHA minimum down payment (3.5 %) – and sometimes more.
- Provides flexibility between forgivable and repayable structures.
- May have no income limits depending on program version.
- Can help borrowers retain savings for moving or emergency funds.
- Available nationwide (except New York), unlike many state-specific DPAs.
Things to Consider
- It’s a second lien, not a grant – you may owe it back if you sell or refinance early.
- Terms can change (interest rate adjustments, forgiveness timelines).
- Must still qualify for the FHA loan under standard credit and income rules.
- Certain versions cannot be used toward closing costs – only the down payment.
| Feature | Chenoa Fund | Typical Local DPA |
|---|---|---|
| Coverage Area | Nationwide (except NY) | Limited to city or state |
| Funding Availability | Year-round program | Often runs out of funding |
| Income Limits | Higher threshold or none for some versions | Usually ≤ 80 % AMI |
| Assistance Amount | 3.5 % or 5 % of purchase price | Often fixed dollar amount |
| Forgivable Option | Yes (36 or 120 payments for forgiveness) | Sometimes |
| Homebuyer Education | Required for some versions | Usually required |
| Property Type | Primary residence only | Primary residence only |
Because JVM Lending is a direct mortgage lender, we can quickly determine if you’re eligible for the Chenoa Fund or if another down payment assistance program offers a better fit.
How to Apply for the Chenoa Fund ( Step-by-Step )
- Talk to a JVM Lending mortgage advisor. We’ll confirm that we’re an approved Chenoa Fund lender in your state and verify your eligibility.
- Qualify for your FHA first mortgage. You’ll complete a standard mortgage application with us.
- Choose your assistance option. We’ll help you decide between the forgivable and repayable versions based on your budget and goals.
- Complete any required homebuyer education course.
- Finalize your loan package and close on your new home.
- Make on-time mortgage payments. If you chose the forgivable version, meeting the required number of consecutive payments could erase the second mortgage entirely.
Questions to Ask Your JVM Lending Advisor
- What is the minimum credit score required for my situation?
- Is there an income cap for this program in my area?
- Does the assistance apply only to the down payment or can it cover closing costs?
- Will my second mortgage be forgivable or repayable?
- How many on-time payments are needed for forgiveness?
- What happens if I refinance or sell before the forgiveness period ends?
- Are there any state-specific limitations I should know about?
JVM Lending’s team will provide clear answers, detailed comparisons, and transparent cost breakdowns before you commit. If you have additional questions, don’t hesitate to contact us – we’re happy to help.
How Our Team Can Help You Navigate the Chenoa Fund
As a nationally recognized mortgage lender, JVM Lending offers both the expertise and direct access to programs like the Chenoa Fund. We don’t just explain your options; we help you qualify, structure your loan, and guide you through closing.
Our mortgage advisors:
- Evaluate your credit, income, and debt profile.
- Identify which Chenoa Fund version fits your goals.
- Ensure full compliance with FHA and program guidelines.
- Monitor your progress toward forgiveness if applicable.
When you work with JVM Lending, you gain a dedicated team that’s committed to making homeownership more achievable, without the stress or confusion often tied to assistance programs.
Ready to get started? Contact JVM Lending today or start your loan application here.
*Last Updated October 2025. Program details and terms may change. Always verify current eligibility, rates, and availability with a JVM Lending advisor before applying. For official guidelines, visit the Chenoa Fund website.
