As a first-time homebuyer, it can be easy to feel overwhelmed. Achieving ownership can feel like a pipe dream and a huge hurdle to overcome. Several programs are available in Colorado to help first-time homebuyers successfully purchase a home. These programs are designed to make purchasing a home more affordable. Here’s what you need to know.
Quick Look: Best First-Time Homebuyer Programs in Colorado
- Best for 30-Year Mortgages: CHFA Preferred
- Best for Purchase Loans: CHFA HomeAccess and HomeAccess Plus
- Best for Low-Rate FHA Loans: CHFA FirstStep and FirstStep Plus
- Best for USDA Rural Development Loans: CHFA SectionEight Homeownership
- Best for VA loans: CHFA SmartStep
Best First-Time Homebuyer Programs in Colorado
If you’re in Colorado, you have several first-time homebuyer programs to choose from. Be sure to keep an eye on the income limits, as some programs do not account for higher costs of living in some areas of the state.
Best for 30-Year Mortgages: CHFA Preferred
The CHFA Preferred program offers a conventional 30-year mortgage for eligible first-time homebuyers in Colorado. All of the mortgages through this program come with a fixed interest rate. There is also an optional second mortgage available alongside this program, called CHFA Preferred Plus.
- Credit score: 620 or higher
- Income limit: $160,300
- Loan limit: $766,500
Pros
- Straightforward mortgage program
- Can come with down payment or closing cost assistance through the CHFA Preferred Plus program
- Fixed interest rate
Cons
- Income limit is fixed statewide and doesn’t account for areas with higher costs of living
- Borrowers are required to make a minimum financial contribution of $1,000
- Only available for single-family properties
Best for Purchase Loans: CHFA HomeAccess and HomeAccess Plus
CHFA HomeAccess is a 30-year mortgage with a fixed interest rate. It is designed for FHA, USDA-RD and VA home purchases. The CHFA HomeAccess Plus is an optional second mortgage loan with 0% interest.
- Credit score: 620
- Income limit: Varies based on location and household size
- Loan limit: $726, 200
Pros
- Borrowers only need to contribute $500 toward their home purchase
- Fixed interest rate
- Income limits vary and may be higher in areas with higher costs of living
Cons
- Does not allow for co-signers or co-buyers if they won’t be occupying the property
- Only available for single-family units
- Not available for conventional loans
Best for Low-Rate FHA Loans: CHFA FirstStep and FirstStep Plus
The CHFA FirstStep offers mortgages with lower interest rates to qualified borrowers. The program is funded with tax-exempt bonds and is available exclusively for FHA loans. There is also the FirstStep Plus second mortgage loan, which offers down payment assistance.
- Credit score: 620
- Income limit: Varies by county and household size
- Loan limit: Varies
Pros
- Offers low interest rates
- Down payment assistance through CHFA FirstStep Plus
- Income limits vary by county and may account for areas with higher home purchase prices
Cons
- Only available for FHA loans
- Multiple income qualification requirements
- Can be subject to IRS Recapture Tax
Best for USDA Rural Development Loans: CHFA SectionEight Homeownership
The CHFA SectionEight program offers a 30-year mortgage with a fixed interest rate. It can be used for FHA or USDA home purchases. There is also an optional grant available that can be used toward the primary mortgage or a second mortgage.
- Credit score: 620
- Income limit: $160,300
- Loan limit: $766,550
Pros
- Fixed interest rates
- Can be used for FHA or USDA loans
- Optional grants can be used toward the down payment, closing costs or prepaids
Cons
- Only available through loan officers who have been certified by the program
- Income limit is the same throughout the state
- Not available for conventional home purchases
Best for VA Loans: CHFA SmartStep
The CHFA SmartStep program is a 30-year mortgage with a fixed interest rate. It can be used for Purchase FHA, FHA 203(k), VA, and USDA-RD purchases. There is also an optional grant available that can be used for principal reductions, prepaids, down payments or closing costs.
- Credit score: 620
- Income limit: $160,300
- Loan limit: $766,550
Pros
- Can be used on manufactured or modular homes
- Grant can be used toward several types of costs
- Not restricted to first-time buyers
Cons
- Requires minimal financial contribution of $1,000
- Only available for government-backed loans
- Spouses who aren’t on the mortgage cannot be on the property’s title
Best National First-Time Homebuyer Programs
In addition to statewide programs in Colorado, there are some nationwide first-time homebuyer programs. Here are the ones you should be familiar with.
Best for More Flexible Credit Score Requirements: FHA Loans
FHA Loans are offered through the Federal Housing Administration. There are several requirements associated with these loans, including property requirements. There is also an upfront mortgage insurance premium required with FHA loans.
- Credit score: 580
- Income limit: Varies by location
- Loan limit: Varies by location
Pros
- Low down payment requirement of 3.5% if the borrower meets the 580 credit score requirement
- Can be used with down payment assistance programs
- Can be used on multi-family units
Cons
- Property must meet several requirements to receive funding
- FHA loan limits
- Borrowers are still subject to mortgage insurance payments
Best National FHA Lender: Rocket Mortgage®
- Best For:Online MortgagesVIEW PROS & CONS:securely through Rocket Mortgage (formerly Quicken Loans)'s website
Rocket Mortgage is an online lender with a robust variety of mortgage products. The company is authorized to offer FHA loans to qualified borrowers. The Rocket Mortgage website is full of information that can help borrowers pick the loan that is the best fit for their needs. The company offers loan experts who can provide personal assistance to borrowers.
- Credit score: 580
- Income limit: Varies by location
- Loan limit: Varies by location
Pros
- Streamlined application
- Online mortgage rates
- Excellent customer support
Cons
- No physical branches
- Hard credit check to receive personalized rates
- Limited information available about the company lender fees
Best for Military Families: VA Loans
VA loans are government-backed loans that are guaranteed by the Veterans Benefits Administration. To qualify, borrowers must be current military members, veterans or the surviving spouse of a veteran and meet other service-related eligibility requirements as well.
- Credit score: 600
- Income limit: Varies by location
- Loan limit: Varies by location
Pros
- No down payment for these loans
- Limited closing costs
- Doesn’t require private mortgage insurance
Cons
- Requires a down payment
- VA Funding Fee
Best National VA Lender: Veterans United
Veterans United is a unique mortgage lender that specializes in helping military families buy a home. One of the company’s best features is that it works with military advisers to provide the best support to its customers. Veterans United also offers homebuyer education resources and other support on its website.
- Credit score: 600
- Income limit: Varies by location
- Loan limit: Varies by location
Pros
- Easy online application process
- Customer support is available 24/7
- Offers other loan types for those who don’t qualify for a VA loan
Cons
- Few physical branches
- Charges an origination fee as well as other fees
- Mortgage rates are sometimes higher than competitor rates
Best for Rural Areas: USDA Loans
USDA loans are offered by the United States Department of Agriculture. They are designed to assist low-to-moderate-income borrowers in rural areas achieve homeownership. These loans are only available in areas designated by the USDA.
- Credit score: Varies by lender
- Income limit: No more than 115% of the area’s median income
- Loan limit: Varies by area
Pros
- No down payment requirements
- No private mortgage insurance requirement
- Can be used to purchase an existing home or a property to build a home on
Cons
- Only available in areas as designated by the USDA
- Only available for properties being used as the borrower’s primary residence
- Income limits
Best National USDA Lender: CrossCountry Mortgage
- Best For:Self-employed BorrowersVIEW PROS & CONS:securely through CrossCountry Mortgage's website
CrossCountry Mortgage is a mortgage lender that helps borrowers across the nation. In addition to USDA loans, the company offers conventional loans, FHA loans and VA loans. CrossCountry Mortgage has a reputation for offering competitive rates and providing top-notch customer service.
- Credit score: 640
- Income limit: Debt-to-income ratio of 41% or less
- Loan limit: Varies by location
Cons
- Few physical branches
- Charges an origination fee as well as other fees
- Mortgage rates are sometimes higher than competitor rates
Cons
- No online quotes
- Mortgage rates not published on the website
- No live chat feature
Qualification Requirements
- Borrowers must be able to demonstrate a positive credit history and meet the lender and/or program’s credit score requirements.
- Borrowers must meet the eligibility requirements for the program they are applying for.
- In most cases, borrowers must use the property they’re purchasing as their primary residence.
- A borrower’s income must be within the range that is accepted by the program.
How to Apply for a Program
- Research programs to see what you might be eligible for.
- If you have questions about the program or your eligibility, reach out to a qualified loan officer.
- Research lenders and choose the one you want to work with.
- Submit your application for the program.
- Stay in contact with your lender to make sure you submit all of the required documents on time.
- If required, complete a homebuyer education course.
Choosing the Right Program
Try not to feel overwhelmed by your options as a first-time homebuyer. To choose the right program for your needs, look into the eligibility requirements to narrow down your choices. Consider where you want to purchase your home as well as your budget. You should also think about down payment assistance program options and whether you plan to apply for those.
Frequently Asked Questions
What are the income limits for first-time homebuyer programs in Colorado?
It depends on the program, but for most first-time homebuyer programs in Colorado, the income limit is $160,300.
Are there any tax incentives for first-time homebuyers in Colorado?
Yes, as a first-time homebuyer, you can apply for the Colorado Homebuyer Tax Credit.
Can I use first-time homebuyer programs to purchase a second home or investment property in Colorado?
No, the first-time homebuyer programs in Colorado require you to use the property you’re purchasing as your primary residence.
