Three Point Mortgage is not a CHFA Participating Lender, and neither Chris Cartwright nor Three Point Mortgage is affiliated with, endorsed by, or representing the Colorado Housing and Finance Authority.
CHFA is a separate public entity. Its program names and materials belong to CHFA. This page explains CHFA programs independently so homeowners can understand them. CHFA loans are originated through wholesale lenders that hold agreements with CHFA. Confirm all program terms directly with CHFA at chfainfo.com, the official source, before making a decision.
If you used CHFA down payment assistance to buy your home and you are now thinking about refinancing, there is a lien behind your first mortgage that most refinance conversations skip entirely.
That second mortgage does not go away because you replace the first. It gets dealt with, one way or another, and which way determines whether refinancing makes sense for you at all.
Start here: did you take the grant or the second mortgage?
CHFA offers assistance in two forms, and only one of them creates this problem.
If you took the down payment assistance grant, there is nothing to repay and nothing to subordinate. A grant is not a lien. Your refinance runs like any other refinance, and you can skip most of this article.
If you took the down payment assistance second mortgage loan, you have a deferred second lien on your property. Repayment is triggered by events including sale, refinance, or payoff of the first mortgage. Refinancing is one of those triggers, which is exactly why this gets complicated.
Check your closing documents if you are not sure which you have. People genuinely forget, and the two outcomes are not close.
The rule that governs your options
When you refinance a first mortgage with a second lien behind it, the second has to either be paid off at closing or subordinated. Subordination means the second mortgage holder formally agrees to stay in second position behind your new loan rather than moving up to first.
Here is the part that decides your options. CHFA publishes that it will only subordinate the CHFA down payment assistance second mortgage loan, and the published subordination path runs to a new CHFA first mortgage loan.
If you refinance into a new CHFA first mortgage, your assistance second may be able to stay in place. If you refinance away from CHFA, into conventional financing or anything else, expect that second mortgage to be paid off at closing out of your equity. Both are legitimate choices. Only one of them is usually presented.
The CHFA FHA Streamline Refinance
CHFA publishes a program for current CHFA homeowners who hold a CHFA FHA first mortgage. According to CHFA's own materials, it may allow eligible borrowers to refinance the first mortgage without paying off an existing CHFA down payment assistance second mortgage, by permitting a one-time subordination of that second to the new CHFA first.
Several published details are worth knowing. CHFA states there are no credit, income, or purchase price limits on this program. The existing assistance second keeps its original terms rather than being rewritten. And the subordination requires a specific CHFA form rather than an informal agreement.
CHFA also publishes payment history requirements, which is the part people trip over. Being current matters, and so does your recent late payment history across the mortgages on the property. If you have had a rough stretch, find out where you stand before you build a plan.
The exceptions that are easy to miss
CHFA publishes that HomeAccess second mortgage loans are not eligible for subordination, and that HomeAccess and SectionEight Homeownership program loans may carry other restrictions.
If your assistance came through one of those programs, do not assume the general path applies to you. Verify your specific loan directly with CHFA before you plan around a subordination that may not be available.
Not sure what you actually have?
Send me your closing documents and your current statements and I will tell you which assistance you took and what your realistic options are.
Think of the subordination as a resource you spend
CHFA publishes this as a one-time subordination. Once.
That changes how you should think about using it. If you refinance now for a modest improvement and conditions improve further later, you may not have the same option available the second time. The assistance second would need to be paid off at that point.
I am not saying wait. I am saying this is a decision with a door that closes behind it, and most people are not told that before they walk through.
Leaving CHFA entirely
Plenty of homeowners should. The assistance did its job, you are in the house, and your situation has changed.
The math has one extra line that a standard refinance does not. You are not just paying closing costs. You are also paying off the assistance second out of your equity, which reduces what you walk away with and may affect your loan-to-value on the new loan.
Run the same break-even calculation I use for any Colorado refinance, which is closing costs divided by monthly savings, but add the assistance payoff to the cost side. Sometimes it still works comfortably. Sometimes it is the line that changes the answer.
What about fees and the appraisal?
These come up constantly in searches, so here is what CHFA publishes rather than what I can promise.
On fees, CHFA's program materials state that no fees shall be charged solely because a loan is originated under a CHFA program or intended for sale to CHFA, and that no fee may be designated as a CHFA fee. That addresses one specific concern. It does not mean a refinance has no closing costs, because the ordinary costs of any refinance still apply.
On documentation, streamline-type refinances generally involve lighter requirements than a full refinance, and CHFA's program matrix for this product addresses items like title insurance directly. What applies to your file depends on your program and your situation, so get it confirmed rather than assuming.
What to gather before you ask anyone
You can get a real answer quickly if you have your original closing documents showing whether you took the grant or the second mortgage, your current mortgage statement, a statement or payoff figure on the assistance second if you have one, and an honest sense of how long you plan to stay in the house.
That last one matters as much as the rest. A refinance that breaks even in four years is a bad idea if you are moving in three, regardless of how the assistance gets handled.
Common questions
Can I refinance a CHFA loan?
Yes, but your options narrow considerably depending on what you want to do. The deciding factor is almost never your credit or your equity. It is what happens to the down payment assistance second mortgage sitting behind your first.
What happens to my CHFA down payment assistance when I refinance?
A second mortgage does not disappear because you refinance the first. It either gets paid off at closing or it gets subordinated, meaning it stays in place and agrees to remain in second position behind the new loan. CHFA publishes that it will only subordinate its own down payment assistance second mortgage, and only to a new CHFA first mortgage loan.
Can I refinance a CHFA loan to a conventional loan?
You can refinance into conventional financing, but understand what happens to the assistance. Because CHFA subordinates its down payment assistance second only to a new CHFA first mortgage, leaving CHFA generally means that second mortgage gets paid off at closing out of your equity. That is not necessarily wrong. It just needs to be in the math before you decide.
What is the CHFA FHA Streamline Refinance?
It is a program CHFA publishes for current CHFA homeowners who have a CHFA FHA first mortgage. CHFA states that it may allow eligible borrowers to refinance the first mortgage without paying off an existing CHFA down payment assistance second mortgage, by allowing a one-time subordination of that second to the new CHFA first. CHFA also publishes that there are no credit, income, or purchase price limits on it.
How many times can I subordinate my CHFA second mortgage?
CHFA publishes this as a one-time subordination. That makes it a resource you spend rather than one you can use repeatedly, which is worth thinking about before you use it on a marginal improvement.
Are there exceptions to CHFA subordination?
Yes, and they matter. CHFA publishes that HomeAccess second mortgage loans are not eligible for subordination, and that HomeAccess and SectionEight Homeownership program loans may carry other restrictions. If your assistance came through one of those programs, verify your specific situation directly with CHFA before planning around a subordination.
The short version
Find out whether you have the grant or the second mortgage. If it is the second, understand that CHFA's published subordination path runs to a new CHFA first mortgage and that it is a one-time option. Price both paths, staying with CHFA and leaving it, with the assistance payoff included in the second one.
I can originate CHFA loans through wholesale lenders who hold the participating lender agreements with CHFA, and I can also price conventional and other options, which means I have no reason to steer you toward one path over the other. If you want both run honestly against your numbers, that is a short conversation.
Verify everything here against CHFA directly at chfainfo.com before you make a decision. Program terms change, and your specific loan may have conditions that general guidance does not cover.
Chris Cartwright is a mortgage broker serving homeowners across Colorado, Washington, Texas, California, Arizona, and Florida. He prices multiple paths against each other so the recommendation follows the arithmetic rather than the product.
Find out what your real options are
Send me your closing documents and current statement. I will tell you what you have, what you can do with it, and whether it is worth doing.