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Homeownership Appraisal Gap Financing Program

Homeownership Gap Financing Program

In line with the misison of encouraging homeownership in the City of Hartford, the Housing Division administers the Appraisal Gap Financing Program (GAP). By creating a financial incentive for builders, developers, and non-profits to develop owner-occupied single and two unit residential homes, the developer is able to fill the "gap" between what it costs to build a home and the appraised value or sales prices of the home. Low to moderate income families are eligible to purchase homes subsidized with GAP funding through a loan that allows for full forgiveness after a minimum of 7 years of required owner-occupancy.

The Homeownership Gap Financing Program commits financing to the developer (for-profit and non-profit), which is then made available to the homebuyer. The "Gap" is the difference between the total project costs and either the appraised value of the property at closing or the actual purchase price. Substantial efforts must be made by the developer to sell the property at or above the appraised value.

Homeownership Gap Financing Program Parameters

The City will provide the minimum assistance to bridge an appraisal gap.  Gap Financing will not be provided to projects with unreasonable or inflated costs. Luxury items such as swimming pools, Jacuzzis, etc. will not be eligible for Gap Financing. Gap Financing will not be available as a construction loan or as a loan to developers. Loans will only be made to the actual homebuyer/owner-occupant. Support will be in the form of a 0% loan, having a seven-year term to the homebuyer. If the borrower complies with the conditions of the loan, namely, maintains the residence as the borrower's primary residence for the required periods of occupancy; maintains the property; complies with the terms and conditions of any first mortgage; and maintains appropriate hazard insurance, the City's loan will be reduced pro-rata based upon the time the homeowner has occupied the unit. The buyer's first mortgage financing shall be from sources that finance close to 100% of the appraised value. The first mortgagee will escrow taxes and insurance. First mortgages not requiring income verification are not allowed.

The maximum Gap Assistance will be $20,000 per unit with a maximum of $40,000 on any one property. No more than 20% of the total development cost can be soft costs (developer's fees and profit included). The amount of the financing provided will be the lesser of the difference between the total project costs and either the appraised value (1st Mortgage Lenders Appraisal) of the property at closing or the actual purchase price. A cost certification prepared by an independent Certified Public Accountant and paid for by the developer will determine the total project costs and must be submitted prior to any funds being dispersed.

Required Periods of Occupancy and Recapture Provisions

The City's mortgage will be a 0%, non-amortizing loan, forgivable after 7 years provided the borrower maintains the property as their primary residence for a period of not less than 7 years. Should the borrower move, sell or transfer title within the first 5 years the total amount of the loan will be due and payable. Should the borrower move, sell or transfer title within the remaining 2 years, the loan will be forgiven at the rate of 50% after five full years, 75% after six full years, and 100% after seven full years.

Additional Information:


Tonja Nelson, Program Supervisor
City of Hartford
Department of Development Services
Housing and Property Management Division
250 Constitution Plaza
Hartford, CT 06103
(860) 757-9032

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Housing and Property Management Contact

250 Constitution Plaza, 4th floor
Hartford, CT 06103
Office: (860) 757-9040
Fax: (860) 722-6630

Office Hours:
8:00am - 5:00pm

HARTFORD CITY HALL ADDRESS: 550 Main Street, Hartford, CT 06103 PHONE: (860)757-9311 HOURS: 8AM - 5PM