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Student loan borrowers facing trouble affording a mortgage have a new option courtesy of the Connecticut Housing Finance Authority.

The state lender announced the launch last week of its “Smart Rate” program, which gives eligible borrowers a 1.125 percent reduction in the interest rate on a first mortgage from the agency.

“This interest rate reduction translates into significant monthly savings, which can then be redirected towards paying off student loans,” CEO Nandini Natarajan said in a statement. “This approach not only makes homeownership more accessible but also helps borrowers manage and reduce their student loan debt more effectively.”

To be eligible for the new program, SMART RATE participants must have a cumulative unpaid student loan debt balance of at least $15,000 at the time of CHFA loan approval and must be in good standing with their student loan servicer. The loan may be in deferment or in repayment. The borrower must be a first-time homebuyer purchasing their primary residence in the state of Connecticut and must meet all other criteria of CHFA’s Mortgage Programs.

“Buying a home for the first time is a major life milestone and our administration has made it a priority to help first-time homebuyers with the financial resources they need to achieve this goal,” Gov. Ned Lamont said in a statement. “I urge anyone who is considering buying their first home and who has student loan debt to look into this new SMART RATE program to learn how it can reduce your mortgage interest rates and help offset the costs of buying a home.”

By reducing the mortgage interest rate, the SMART RATE program can help to offset the student loan debt payment, enabling homebuyers to manage both expenses more affordably. SMART RATE saves the borrower money over the long term while allowing them to build equity in their home. Officials hope the program will also help homebuyers coming from underrepresented backgrounds afford a home as another step into the state’s middle class.