The ADU Credit Enhancement Program supports lenders offering affordable loans to eligible low- and moderate-income borrowers for the construction or conversion of ADUs.
Program Benefits
- The ADU Credit Enhancement Program provides a cash deposit up to 10 percent of the loan amount that serves as additional collateral securing the borrower’s loan, reducing or eliminating the amount of borrower equity provided, or enabling the lender to provide a larger loan for the ADU project.
Eligible Lenders and Use of Funds
- Eligible lenders include banks, credit unions, for-profit lenders, nonprofit lenders, and community development financial institutions (CDFIs).
- Lenders must be able to demonstrate the ability to perform income verification of the residential homeowner.
- Lenders must have prior history in residential mortgage lending, with a preference given to lenders with a prior history in lending related to ADUs.
- Eligible projects must be located in an ADU Supportive Jurisdiction. Information regarding the location of ADU Supportive Jurisdictions can be found on the Colorado Division of Local Government (DLG) website.
An ADU, as defined by C.R.S. 29-35-402, is an internal, attached, or detached dwelling unit that provides complete independent living facilities for one or more individuals, is located on the same lot as a proposed or existing primary residence, and includes facilities for living, sleeping, eating, cooking, and sanitation.
Affordability Requirements
- Lenders must income-qualify ADU borrowers at or below 140 percent of the statewide Area Median Income (AMI), currently $174,440, prior to loan closing, as established by CHFA.
Eligible Loans and Deposit Limits
- The maximum eligible loan amount is the maximum conventional loan limit for the project county. Specific county limits can be found on the Federal Housing Finance Agency (FHFA) website.
- Loans will have a maximum maturity and amortization of 30 years. Quarterly reporting requirements apply. Please see complete program guidelines available upon request for details.
- The ADU Credit Enhancement Program provides cash deposits up to the lesser of (1) 10 percent of the eligible loan amount, or (2) the size of the demonstrated collateral shortfall.
- Each deposit will have a maximum term of eight years. If the loan term is shorter than eight years, the deposit term will match the loan term. Deposits will expire if the loan is repaid before the deposit term ends.
The above is intended only to highlight certain program requirements. Please email businessfinance@chfainfo.com to receive an application and complete program guidelines.
Application Process
Applications will be accepted on a first-come, first-served basis until funds are depleted. Lenders may apply for support by completing an application and submitting the necessary documentation as outlined in that application to CHFA.
Please email businessfinance@chfainfo.com to receive an application and complete program guidelines. Completed applications should be sent to the same email address. After reviewing, CHFA will provide email notification of project approval.
