Best First Time Home Buyer Programs in Colorado

If you’re buying your first home in Colorado, there’s a lot you need to know. First, you should know that there are first-time home buyer programs in Colorado that you may be able to take advantage of. Benzinga has put together this guide to tell you everything you need to know before you commit to your first mortgage loan.

Best First Time Home Buyer Programs in Colorado:

• Best for 30-Year Mortgages: CHFA Preferred
• Best for Purchase Loans: CHFA HomeAccess and HomeAccess Plus
• Best for FHA Loans: CHFA FirstStep ad FirstStep Plus
• Best for USDA Rural Development Loans: CHFA SectionEight Homeownership

Best National First Time Home Buyer Programs and Lenders:

• Best Mortgage Lender for FHA Loans: Rocket Mortgage
• Best Mortgage Lender for VA Loans: Veterans United
• Best Mortgage Lender for USDA Loans: Caliber Home Loans

First Time Home Buyer Programs in Colorado

As a home buyer in Colorado, you should take a look at the first time home buyer programs that are available to you. These Colorado Housing and Finance Authority (CHFA) programs can help make homeownership more affordable so you can purchase and move into your new home sooner rather than later.

1. CHFA Preferred

The CHFA Preferred program offers 30-year fixed-rate mortgage loans. If you qualify, you can choose between a Fannie Mae “HFA Preferred” or Freddie Mac “HFA Advantage” conventional purchase loan. This program accepts down payments as low as 3% and you may be able to qualify for down payment assistance.

Eligibility requirements: 

• You must have a minimum credit score of 620 or higher.
• Your income must be less than $115,600.
• Your home’s purchase price cannot exceed the maximum loan limits as required by Fannie Mae or Freddie Mac.
• You must contribute at least $1,000 toward your home’s purchase.

2. CHFA HomeAccess and HomeAccess Plus

This program offers a 30-year fixed-rate mortgage loan. If you qualify, you can choose between an FHA 203(b) or USDA Rural Development purchase loan. It’s designed to help borrowers with permanent disabilities or parents of children with permanent disabilities purchase their own homes.

If you qualify for this program, you can receive down payment assistance in the form of a 2nd mortgage. You can receive this 2nd mortgage in an amount of up to $25,000 with 0% interest. Payments for this 2nd mortgage option are deferred until you pay off your 1st mortgage.

Eligibility requirements: 

• You must be a first time homebuyer and/or a qualified veteran.
• You must have a permanent disability or be the custodial parent of a child who has a permanent disability.
• You must contribute at least $500–$750 toward your home’s purchase price.
• You must have a minimum credit score of 620 or higher.
• Your loan amount cannot exceed the maximum amounts as allowed by the Federal Housing Administration (FHA) or USDA Rural Development guidelines.
• You must meet certain income and purchase price limits. These limits may vary depending on factors such as your household size and the county where you are buying your home.

3. CHFA FirstStep and FirstStep Plus

The CHFA FirstStep program offers a 30-year fixed-rate FHA 203(b) purchase loan to qualified borrowers. You can also receive down payment assistance through a 2nd mortgage for up to 5% of the amount of your 1st mortgage loan. Your 2nd mortgage will have 0% interest and be deferred until you’ve finished paying for your 1st mortgage. 

Eligibility requirements: 

• You must be a first time homebuyer, a qualified veteran or a homebuyer who is purchasing a home in a targeted area.
• Your mortgage must be an FHA 203(b) mortgage loan.
• You must have a minimum credit score of 620 or higher.
• You must contribute a minimum of $1,000 toward your home’s purchase price.
• You must meet certain income and purchase price limits. These limits may vary depending on the county where you are buying your home.

4. CHFA SectionEight Homeownership

If you receive housing assistance, you may be able to receive additional assistance from the Colorado Housing and Finance Authority to buy your home. This program offers 30-year fixed-rate mortgages with the option to choose between an FHA or USDA Rural Development loan. You may also be able to receive down payment assistance with this program.

Eligibility requirements: 

• You must be a first time homebuyer who receives housing assistance payments from the Public Housing Authority.
• You must have a minimum credit score of 620 or higher.
• Your income must not be more than $115,600. 
• Your maximum loan limit must not exceed the limits set by the FHA or USDA Rural Development guidelines.
• You must pay a minimum of $500–$750 toward your home’s purchase price.

Best National First Time Home Buyer Programs

In addition to first time home buyer programs in Colorado, there are national programs that you can benefit from. These programs were created to make homeownership more accessible to borrowers who may not be able to afford to meet the standards of conventional loans. When you apply for any mortgage loan, lenders will take a look at a few things:

• Credit score: Your lender looks at your credit score to see if you’re a reliable borrower who is responsible with their money. 
• Debt-to-income ratio: Lenders use this ratio to help determine the amount of money it feels comfortable lending you. The ratio compares the total amount of debt you currently owe with your income.
• Minimum down payment: When you purchase a home, you usually need to make a minimum down payment. This is the minimum amount of money you must pay upfront. The minimum down payment is usually a percentage of your home’s purchase price. The rest of the purchase price is the amount you borrow from your mortgage lender.

Here’s an overview of the national programs that are popular among first time home buyers. 

FHA Loans

FHA mortgage loans are issued by private lenders that are approved by the FHA. These mortgages allow buyers with low and moderate incomes the ability to purchase a home. Lenders of FHA mortgage loans accept lower credit scores and minimum down payments for FHA loans. 

Usually, you can expect your lender to require you to have a minimum credit score of 580 to be approved. It will also require you to make a minimum down payment of 3.5%. If your credit score is between 500 and 579, your lender may approve you for an FHA loan as long as you can make a 10% minimum down payment. If you need help paying your down payment, you may be able to receive a grant for down payment assistance.

In addition to meeting these standards, you’ll need to meet the following qualifications for an FHA loan:

• The home you’re purchasing must meet minimum property standards to qualify for an FHA loan. The home will be inspected to ensure that it meets these standards.
• You must use the home you are purchasing as your primary residence. This means it can’t be purchased as your second home or as an investment property.
• You must move into your home within 60 days of closing.

Best National FHA Lender: Rocket Mortgage® by Quicken Loans®

Rocket Mortgage® by Quicken Loans® has risen to become one of the most popular online mortgage lenders available today. You can receive a number of FHA mortgage loans from Rocket Mortgage®, including FHA refinance options.

The intuitive Rocket Mortgage® online application makes it quick and easy to get a quote and get approved for your FHA loan. All you need to do is input a few personal details to allow Rocket Mortgage® to find your income information. 

VA Loans

VA loans are mortgage loans that are guaranteed by the U.S. Department of Veterans Affairs (VA) but issued by private lenders such as banks. These loans are designed to help veterans, service members and their families afford to purchase their home. 

The benefits of VA loans include $0 minimum down payments, allowing qualifying borrowers to finance the entire purchase price of their home. The program also offers assistance to help you avoid defaulting on your VA mortgage loan if you are struggling to afford your payments.

Although this program is certainly available to first time home buyers, you do not need to be a first time home buyer to qualify. You do need to meet one of the following service requirements that are set by the U.S. Department of Veterans Affairs:

• You served 90 consecutive days of active service during wartime.
• You served 181 days of active service during peacetime.
• You are the spouse of a military member who passed away either in the line of duty or from a service-related disability.

Best National VA Lender: Veterans United

If you want to take out a VA mortgage loan, you should look into loan providers who understand the unique needs you have. Veterans United employs service members from each member of the armed forces, so you may find yourself speaking to a fellow military member throughout the process.

Its financial advisors can help you determine the best mortgage loan option for you. It also offers more flexibility than other lenders when it comes to its minimum debt-to-income ratio requirements. 

USDA Loans

USDA mortgage loans were created to encourage homeownership in areas designated by the United States Department of Agriculture (also known as the USDA). If you’re comfortable living in a more rural area, this may be a great program to help you purchase your home. USDA loans offer low down payments, lower minimum credit score requirements and competitive interest rates. Like other national loan programs, your USDA mortgage loan will be issued by a private lender, not the government. 

There are a few qualifications for a USDA mortgage loan:

• You must be under certain income limits. The income limits are based on the cost of living in the area where you are buying your home.
• The home you are interested in purchasing must be in a qualifying area, as determined by the USDA.
• You must plan to use the home as your primary residence. This means you can’t purchase the home as an investment property or as a 2nd home.

Best National USDA Lender: Caliber Home Loans

Caliber Home Loans is a loan provider that is approved by the USDA. It offers competitive fixed interest rates, so you’ll never have to worry about your monthly payments increasing from a change in your interest rate.

You can receive a USDA mortgage loan from Caliber Home Loans with a $0 minimum down payment. Your closing costs will also be paid by the seller of your home, meaning there is one less cost for you to worry about.

Which Program is Right For You?

Whether you’re self-employed or buying your home in a rural area, there’s probably a first time homebuyer program for you. You should review the programs that are offered by Colorado and by the federal government to see if you qualify for any. If you qualify for multiple programs, it’s a good idea to compare the benefits of each to see which can offer you the best fit for your budget.

Frequently Asked Questions