OLR Research Report

August 21, 2006




By: Joseph Holstead, Associate Analyst

You asked for a list of state and federal grant and loan programs, including energy efficiency programs, for homeowners to make home improvements.


Several state agencies provide loans for home improvements (i.e., rehabilitation and repairs). The quasi-public Connecticut Housing Finance Authority's (CHFA) Rehabilitation Mortgage Loan program is available to low- and moderate-income first time homebuyers using a CHFA mortgage and for refinancing when repairs are necessary. The Department of Economic and Community Development (DECD) offers loans for energy conservation, lead paint abatement, and emergency home repairs. They also administer a federal program that is run through municipalities, which may have some funding for home repairs. The Department of Social Services (DSS) administers an energy assistance program that helps low-income homeowners make improvements in their home's energy efficiency.

At the federal level, the Department of Housing and Urban Development (HUD) administers mortgage insurance programs for homes that need rehabilitation. It also funds loan and grant programs, which the state or local governments administer, that may be used for home repairs. The U.S. Department of Agriculture (USDA) and the Department of Veterans Affairs also offer loans and grants for home repairs respectively based on the town where the home is located and a veteran's disability.

Although not technically a loan or grant, the Connecticut Clean Energy Fund (CCEF) offers rebates for Connecticut residents who install solar photovoltaic systems (solar panels or cells) on their homes. The program became effective October 1, 2004. The incentives are available only through participating installers that have been designated by CCEF, according to its website. Attachment 1 contains more information or check CCEF's rebate webpage.



CHFA's Rehabilitation Mortgage Program is available to low- and moderate-income people to purchase or refinance a home in need of repair. Household income limits apply to purchasers in most towns. The income limit in Milford, for example, for one or two people is $84,925 and $97,665 for three or more. However, there are no income limits in targeted areas, which are specified areas in the following towns: Ansonia, Bridgeport, Danbury, Enfield, Groton, Hartford, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Rocky Hill, Stamford, Torrington, Waterbury, and Windham. That is, in targeted areas, over-income households may still apply for CHFA financing regardless of income limits (there are no targeted areas in Milford). Attachment 2 lists income limits and the targeted areas for the state.

In the case of a home purchase, the Rehabilitation Mortgage Loan funds can be used for the home purchase price along with the expenses for renovation. When used to refinance a home, the Rehabilitation Mortgage Loan amount includes the funds to pay off the existing first mortgage as well as the cost of repairs, according to CHFA.

At this time, these loans are only available through one lending institution, which originates loans only in Windham, Tolland, and New London counties, according to CHFA's website.


DECD funds several programs that help with home repairs. Their energy conservation loan program makes low-interest loans available for a number of cost-saving conservation measures, including insulation and furnaces. The Homeowner's Emergency Repair Assistance for Seniors Program gives grants or low-interest loans to repair homes of low-income homeowners who are at least 62 years old. The hazardous materials abatement program gives grants and low-interest loans to homeowners for lead-based paint abatement and asbestos removal.

These programs are currently run by the Community Renewal Team (CRT), an anti-poverty agency contracting with DECD. CRT operates these programs through its “Home Solutions” program. Home Solutions thus is a state-wide combined loan and grant program that offers financial assistance for hazardous material abatement, septic system repair, removal or enlargement and senior citizen emergency repairs and rehabilitation projects. The programs are available for residential owner-occupied and rental properties. (Properties may be single or multi-family dwellings, with no more than six units depending on the project.)

At this time, the Hazardous Materials Abatement and Senior Emergency Repair programs have a waiting list, according to CRT. Time spent on the waiting list varies from three to six months. Applicants can mail in a written request to be placed on the waiting list and request an application at that time. More information is available by calling (860) 347-4465 or (877) 254-6601.

DECD also administers the federal Small Cities Community Development Block Grant Program (CDBG), which may have some funding available for home repairs. This federally-funded program gives annual grants to towns for affordable housing and community revitalization. A homeowner should contact his town's housing department for information on this program as well as any other town financed repair programs, or check the CDBG webpage for more information.


DSS administers the Connecticut Weatherization Assistance Partnership with utility companies and local Community Action Agencies. The program assists low-income families with incomes up to 200% of the federal poverty guidelines to reduce their energy bills by making their homes more energy efficient. The federal poverty guideline is currently $20,000 for a four-person household, according to the federal Department of Health and Human Services website. (200% of the poverty guideline for a family of four is $40,000.)

Attachment 3 contains more information on the program or see the DSS weatherization webpage.



Insured Loans. The Federal Housing Administration (FHA), which is part of HUD, administers mortgage insurance programs for homes that need rehabilitation. These programs operate through FHA-approved lending institutions, which fund the loans that HUD insures. HUD does not make direct loans to help people buy homes.

For example, HUD's 203(k) program is available to purchase or refinance a property, including cost of making the repairs and improvements in the loan. The FHA insured 203(k) loan is provided through approved mortgage lenders nationwide to credit-worthy individuals that complete the application process. The amount of the loan includes the mortgage and cost of repairs, plus a contingency reserve of 10% to 20% of the total remodeling costs to cover any extra work not included in the original proposal, according to HUD. A list of lenders is available through HUD's website. More information about the program is in attachment 4 or see the 203(k) program webpage.

The Title I Program insures loans to finance the light or moderate rehabilitation of properties. FHA insures the loans, making it easier for consumers to obtain affordable home improvement loans from private lenders to improve properties that meet certain requirements. Eligible borrowers include property owners who need to make improvements, the person leasing such a property (provided the lease will extend at least six months beyond the date when the loan must be repaid), or someone purchasing the property under a land installment contract.

Title I loans may be used to finance permanent property improvements that protect or improve the basic livability or utility of the property, including (1) manufactured, single-family, and multifamily homes; (2) nonresidential structures; and (3) preservation of historic homes. The loans can also be used for fire safety equipment. Applications must be submitted to a Title I-approved lender. The following link lists HUD-approved lenders. More information is available by calling FHA's Home Mortgage Insurance Division at (202) 708-2121, according to HUD's website.

HOME Program. HOME Investments Partnership Program or HOME funds may be used to assist existing homeowners with the repair, rehabilitation, or reconstruction of owner-occupied units. Specifically, funds may be used for weatherization, emergency repair, or handicapped accessibility programs to bring a property up to code.

For homeowner rehabilitation programs, state or local fund administrators (known as “participating jurisdictions,” which in Connecticut means either DECD or a city government) most commonly use the following forms of assistance (1) grants, (2) deferred-payment loans, (3) non-interest-bearing loans, and (4) interest-bearing loans.

The work done with HOME funds for rehabilitation must be performed according to the participating jurisdiction's written rehabilitation standard and the house or unit must be brought up to the applicable state or local code, according to HUD.

For more information, contact DECD's (DECD administers the program) Faith Bessette-Zito, Program Manager, Office of Housing Finance, at (860) 270-8169 or visit the DECD webpage.

USDA Rural Development Loans and Grants

USDA's Rural Development assistance is available for repairs of existing homes. It is available in rural communities and small-incorporated towns of up to 10,000 people, but some communities of between 10,000 to 20,000 people may be eligible. Currently, 23 Connecticut towns are eligible, according to USDA's website. Table 1 lists the towns.

Table 1: Towns Eligible for Rural Development Assistance









East Granby


East Haddam


East Hampton










North Cannan


The loans are available to very low-income homeowners ($40,850 for a family of four in the New Haven-Milford Metropolitan Statistical area, see attachment 5) to address general repairs to improve, modernize, weatherize, or remove code violations. The loan amount is limited to $20,000, with scheduled repayment not to exceed 20 years at a 1% interest rate. Grants of up to $7,500 are available for senior citizens unable to afford a loan, but only for repairs and improvements that will remove health or safety hazards. Repairs may also be made to make the property accessible and usable for household members with disabilities, according to USDA. For more information, contact USDA's local rural development offices, which are located in Windsor (serving western and central Connecticut) (860) 688-7817 and Norwich (serving eastern Connecticut) (860) 859-5218.

Veterans Affairs Regional Loan Center Grants for Specially Adaptive Housing

Certain veterans with specific service-connected disabilities may be entitled to a grant from the Department of Veterans Affairs to construct a new specially adapted dwelling or to adapt an existing dwelling to meet their specific needs.

The Specially Adapted Housing (SAH) Program's goal is to provide a barrier-free, wheelchair accessible living environment that allows the veteran a level of independent living. Two grants currently exist within the SAH Program for the six New England states at VA's Regional Loan Center in Manchester, NH, according to its website. They are:

1. SAH Grant 2101(a) of up to $50,000 for veterans who are entitled to compensation for permanent and total service-connected disability, such as loss or loss of use of lower extremities, and

2. SAH Grant 2101(b) of up to $10,000 for veterans who are entitled to compensation for permanent and total service-connected disability due to blindness in both eyes and loss or loss of use of both hands.

Attachment 6 contains more information on this program.

For more information on this and other programs, including non-profit loan programs, see HUD's website: