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If you live in Colorado and are a first-time homebuyer, you might be eligible for a variety of mortgage programs at the state and local levels. If you qualify, you could receive loans and grants to help with down payment and closing cost requirements even if you don’t have perfect credit or extensive cash reserves.
You might also be able to combine these benefits with a loan backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) or Department of Veterans Affairs (VA) if you don’t have enough cash for a conventional 20% down payment.
First-time Homebuyer Programs for Colorado Residents
There are many first-time homebuyer programs available from state, county and city organizations. Many programs operate as a second mortgage to cover the closing costs and down payment of your first home loan. In other situations, you may receive favorable terms on a first loan.
You could be eligible for the following programs if you’ve never owned a house or it’s been at least three years since being a previous homeowner.
Colorado Housing and Finance Authority
The Colorado Housing and Finance Authority (CHFA) offers up to 100% financing on mortgage loans with down payments as low as 3% of the borrowed amount. These loans can have fixed interest rates and 30-year repayment terms.
The CHFA also offers a type of second mortgage loan to assist with your down payment and closing costs. Your loan proceeds can range up to 4% of your first mortgage’s amount. It’s also possible to defer repayment until you’ve paid off your primary loan, refinanced it or sold your residence.
Keep in mind that borrowers must contribute at least $1,000 to a loan and meet other income, credit and lender underwriting requirements to be eligible for select products. Some of the minimum borrower requirements include:
- A minimum credit score of 620
- Attending an approved homebuyer education before closing (in-person or online)
- Not exceeding the CHFA income limits on total borrower income
The CHFA general guidelines are similar to most first-time home buyer programs. However, your lender may have additional underwriting guidelines that you’ll need to satisfy.
Colorado Housing Assistance Corporation
The Colorado Housing Assistance Corporation (CHAC) offers second mortgage loans to low- and moderate-income households to reduce the upfront burden of closing costs and down payment. Similar to the CHFA program, the borrower must make a $1,000 minimum contribution—but the interest rates are low, and the repayment plans can be flexible.
Your primary mortgage lender will submit an application on your behalf for this program if you’re eligible.
Colorado Housing Enterprises
New and existing homeowners statewide can access federally-insured mortgages more easily through Colorado Housing Enterprises (CHE). You may consider these loans if you’re struggling to satisfy the down payment requirements for a conventional mortgage.
This organization is part of the Community Resources and Housing Development Corporation (CRHDC), which has been helping Coloradans afford housing since 1971.
Some of the programs for a Colorado first-time homebuyer include:
- FHA Insured First Mortgage: This is an FHA loan for first-time buyers who have a steady income and can make a down payment as low as 3.5%.
- VA loan: A VA-backed purchase loan may not require a down payment and not have ongoing mortgage insurance premiums.
- 502D Direct Housing Loan Program: Households with very low or low incomes can qualify for financing. This is a USDA loan for rural communities only.
- 502 Guarantee Loan: This is another USDA Section 502 loan program that may not require a down payment or cash reserves.
- Downpayment Assistance Loan Program: This is a second mortgage with a 10-year term, and it provides up to $10,000 in funds to help with your down payment and closing costs.
- 90/10 Loan Program: This can help you potentially reduce your mortgage insurance obligation with a first mortgage of up to 90% financing and the second mortgage up to 10%.
NEWSED Community Development Corporation
Denver metro area residents can receive up to $10,000 in assistance through NEWSED. This second mortgage can be used for:
- Closing costs
- Down payment
- Interest buy down
- Principal reduction
County and City Programs
There are many county and city homeownership programs that are worth inquiring about, too. The U.S. Department of Housing and Urban Development (HUD) mentions over 30 initiatives that residents could be eligible for. Some of the participating areas include:
- Arapahoe County
- Boulder County
- Fort Collins
The program benefits and minimum qualifications can vary. Contact your local housing authority for more information.
First-time Homebuyer Grants for Colorado Residents
You should also look for grants for first-time homebuyers as they typically don’t require repayment. Unfortunately, though, these are less common than down payment assistance loans for first-time homebuyers.
The following grants can help you meet down payment requirements.
CHFA Down Payment Assistance Grant
The CHFA grant program can cover up to 3% of your first mortgage down payment with no repayment necessary.
The NeighborhoodLIFT program through CRHDC offers up to $15,000 in down payment assistance in the Denver-Aurora area. This program is available to first-time and repeat homebuyers.
Participating counties include:
Technically, this is a second mortgage, but it can be fully forgiven if you live in the home for five years. Under current program rules, each year of residence forgives 20% of the loan balance. Selling your home early requires paying off the remaining balance immediately.
National Homebuyers Fund
The National Homebuyers Fund (NHF) offers down payment assistance across the U.S. for most purchase and refinance loans. NHF may cover up to 5% of your mortgage loan amount and forgive the balance immediately or after several years.
FHA, VA, USDA and conventional mortgages can be eligible for aid.
How to Buy a House in Colorado
Whether you’re moving to Colorado or currently renting in the state, the homebuying process is similar.
Following these steps can help you choose the best mortgage and not overlook any assistance programs:
- Compare assistance programs. You might be eligible for multiple statewide and local programs and grants. It can also be worth considering federal loan programs from the FHA, VA and USDA for additional benefits.
- Find a participating lender. Not every lender works with each program, so be sure to do your research to compare lenders that participate. By considering multiple mortgage lenders that work with first-time homebuyers, you’ll have an easier time finding a good deal.
- Apply for first-time homebuyer assistance. Typically, you begin the application process once the home is under contract. You can generally expect the closing process to take three weeks. Your lender will help with this step.
- Attend a homebuyer education class. These programs usually require attending an in-person or online first-time homebuyer class before closing. It’s possible to complete this class before submitting a purchase offer, and the completion certificate will be valid for up to 12 months.
- Close on your loan. If you’re approved, you’ll need to sign the closing documents once your lender finalizes your loan terms and homebuyer program benefits.
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