Editor’s Note: We receive a commission from affiliate links on Forbes Consulting. Commissions do not affect our editors’ opinions or reviews.
If you live in Colorado and are a first-time homebuyer, you may qualify for a variety of homebuyer programs at the state and local level. If you qualify, you may be able to get loans and grants to help with down payments and closing costs, even if you don’t have perfect credit or extensive cash reserves.
You may also be able to combine these benefits with a loan backed by the Federal Housing Administration (FAA), US Department of Agriculture (USDA), or Department of Veterans Affairs (VA) if you don’t have enough money for the typical 20%. Advance payment.
First time home buyer programs for Colorado residents
There are many first-time home buyer programs available from state, county and city organizations. Many programs work as a second mortgage to cover the closing costs and down payment of your first home loan. In other cases, you can get favorable conditions on the first loan.
If you have never owned a home or are a former homeowner for at least three years, you may be eligible for the following programs.
Colorado Housing and Finance Authority
The Colorado Housing and Finance Authority (CHFA) offers up to 100% financing for borrowers with a down payment of 3% of the loan amount. These loans can have fixed interest rates and repayment terms of 30 years.
CHFA offers a type of second home loan to help with your down payment and closing costs. Your loan proceeds can be as high as 4% of the original mortgage amount. Payments can be deferred until you pay off your principal, refinance, or sell your home.
Keep in mind that borrowers must contribute at least $1,000 to the loan and meet other income, credit and lender requirements to qualify for select products. Some minimum borrower requirements include:
- The minimum credit score is 620
- Attend an approved home buyer education before closing (in person or online)
- The total income of the borrower does not exceed the CHFA income limits
CHFA’s general guidelines are similar to most first home buyer programs. However, your lender may have additional written guidelines that you will need to comply with.
Colorado Housing Assistance Corporation
The Colorado Housing Assistance Corporation (CHAC) offers second mortgage loans to low- and moderate-income households to reduce the initial burden of closing costs and down payments. Similar to the CHFA program, the borrower must make a minimum contribution of $1,000—but the interest rates are lower, and repayment plans can be flexible.
If you qualify, your primary mortgage lender will apply for this program on your behalf.
Colorado Homes Enterprises
New and existing homeowners statewide have easy access to federally-insured loans through Colorado Housing Enterprises (CHE). If you are struggling to meet the down payment requirements for a regular loan, you may want to consider these loans.
This organization is part of the Community Resources and Housing Development Corporation (CRHDC), which has been helping Coloradans buy homes since 1971.
Some programs for the Colorado first-time home buyer include:
- FHA insured first loan This is an FHA loan for first-time buyers with a fixed income and can have a down payment as low as 3.5 percent.
- VA loans A VA-backed purchase loan requires no down payment and may not have an ongoing mortgage insurance premium.
- 502D Direct Home Loan Program: Families with very low or very low incomes may be eligible for financial assistance. This USDA loan is for rural communities only.
- 502 Guaranteed Loan: This is another USDA Section 502 loan program that does not require a down payment or cash reserve.
- Down Payment Assistance Loan Program: This is a second mortgage with a 10-year term, and offers up to $10,000 in financing to help with your down payment and closing costs.
- 90/10 Loan Program: This can help you reduce your mortgage insurance obligations by financing up to 90% of the first mortgage and up to 10% of the second mortgage.
NEWSED Community Development Corporation
Denver metro area residents can receive up to $10,000 in grants through NEWSED. This second loan can be used for:
- Closing costs
- Advance payment
- Buys interest.
- Main reduction
County and city programs
There are many county and city home ownership programs worth asking about. The US Department of Housing and Urban Development (HUD) lists more than 30 initiatives that residents may be eligible for. Some participating areas include:
- Arapahoe County
- Boulder County
- Fort Collins
Program benefits and minimum qualifications may vary. Contact your local housing authority for more information.
First time home buyer gifts for Colorado residents
You should also look for subsidies for first-time home buyers, as they usually don’t require a down payment. Unfortunately, these are less common than down payment assistance loans for first-time home buyers.
The following subsidies may help you meet your down payment requirements.
CHFA Down Payment Assistance Grant
CHFA’s subsidy program can cover up to 3% of your first mortgage down payment at no cost.
The NeighborhoodLIFT program through CRHDC provides up to $15,000 in down payment assistance in the Denver-Aurora area. This program is available to first-time and repeat home buyers.
Participating regions include:
Technically, this is a second mortgage, but it can be completely forgiven if you live in the house for five years. According to the current program rules, each year of residence will forgive 20% of the loan balance. Selling your home early requires paying off the remaining balance immediately.
National Home Buyers Fund
The National Home Buyers Fund (NHF) provides down payment assistance for most homebuyers and mortgages across the US. NHF can cover up to 5% of the mortgage loan amount and forgive the balance immediately or over several years.
FHA, VA, USDA and conventional mortgages may qualify for assistance.
How to buy a house in Colorado
Whether you’re moving to Colorado or currently renting in the state, the home buying process is the same.
Following these steps will help you choose the best mortgage and avoid overlooking any assistance programs:
- Compare grant programs. You may be eligible for many statewide and local programs and grants. For additional benefits, it may be worth considering federal loan programs from the FHA, VA and USDA.
- Find a participating lender. Not every lender works with every program, so be sure to do your research to compare participating lenders. Considering the many mortgage lenders that work with first-time home buyers, you’ll have an easier time finding a good deal.
- Apply for first time home buyer help. Typically, you start the application process after the home goes under contract. In general, you can expect the closing process to take three weeks. Your lender will help with this step.
- Attend a homebuyer education class. These programs often require a first-time home buyer class to attend in person or online before closing. This section can be completed prior to submitting an offer to purchase, and the completion certificate is valid for up to 12 months.
- Close on your loan. If you’re approved, you’ll need to sign the closing documents after your lender completes your loan agreement and Home Buyer Program benefits.
Related: What is the first-time home buyer credit and why doesn’t it exist anymore?
Quick, easy mortgage loan
Check your rates today with Better Mortgage.