First Time Home Buyer in Colorado: An Ultimate Guide to the Home Buyer Assistance Programs

Moving to Colorado can become a dream come true, especially for people who can afford their own homes. Colorado possesses so many great attributes you’ll love: friendly people, outdoor activities, and stunning scenery.

Home to the Rocky Mountains with its stunning Pikes Peak and other 57 mountains more than 14,000 feet tall, Colorado also boasts 42 state parks where you can sunbathe, snowboard, mountain bike, fish, and climb.

Whether you wish to visit an art gallery, go heli-skiing, check out a museum, or connect with Mother Nature, Colorado has it all. However, you need to be wary of the homeownership cost if you intend to buy a house in the Centennial State.

First-time homebuyers on a budget will have difficulty buying a house in Colorado. Fortunately, the Colorado Housing and Finance Authority (CHFA) offers some programs to help Colorado first-time home buyer achieve their dreams.

Colorado local governments also offer several first-time homebuyer programs, allowing eligible people to receive down payment and closing costs assistance. Nevertheless, you’ve got to meet the programs’ requirements, including buying a home in specific geographic locations and income limits for the intended homeowner.

The assistance programs also come with payback requirements and minimum occupancy periods if you intend to refinance or sell your property.

Understanding the program’s requirements will enable you to choose the one that’s best for you. Are you an intending homeowner looking to take advantage of the numerous homebuyer assistance programs in Colorado? This guide is for you.

This article explores the various assistance programs for Colorado first-time homebuyers and how they work in major Colorado cities. Let’s dig in!

Colorado First-time  Homebuyer Assistance Programs

There are various state and local programs for a first-time home buyer in Colorado. Such as:

1. CHFA

The statewide Colorado Housing and Finance Authority (CHFA) program provides down payment and education assistance to intending homeowners. Most CHFA loans need a 620 credit score. However, you might find CHFA-approved lenders that’ll accept a 580 score.

The following are some of the CHFA first-time homebuyers program you can access in Colorado:

• CHFA FirstStep

The Colorado Housing and Finance Authority’s FirstStep and FirstStep Plus are house assistance programs offering 30-year fixed-rate first-time homebuyers’ FHA loans and the down payment to veterans and any other person interested in buying a property in the targeted areas.

Besides meeting the CHFA general requirements, you’ll need to ensure that the house you intend to buy is within the program’s income and purchase price limits.

• CHFA HomeAccess

The HomeAccess and HomeAccess Plus programs provide a 30-year fixed-rate USDA or FHA loan to veterans with permanent disabilities and first-time homebuyers. There are also purchase and income price limits; if qualified, you can get about $25,000 down payment assistance alongside your loan.

• CHFA SectionEight

The SectionEight and SectionEight Plus programs offer a 30-year fixed-rate USDA or FHA loan for intending homebuyers or veterans receiving Section 8 assistance. If eligible, you can combine this homeownership program with the CHFA down payment assistance but with a borrower’s income limit of $130,200.

• CHFA SmartStep

This CHFA homeownership program comes in two options: SmartStep and SmartStep Plus. With a 30-year fixed-rate USDA, VA, or FHA loan offers and down payment assistance, the CHFA SmartStep program has a $130,200  income limit like the SectionEight option.

• HFA Preferred and Advantage Loans

CHFA offers the Freddie Mac Advantage, and Fannie Mae HFA Preferred loans providing about 97 percent financing. An example is the Advantage loan for low-income borrowers known as the Very-Low Income Program (VLIP).

You can also pair this loan with down payment assistance from CHFA.

2. CHAC

Another statewide body offering assistance, education, and advice to first-time homebuyers in Colorado is the Colorado Housing Assistance Corporation (CHAC). Besides down payment assistance, CHAC provides counseling and education courses to intending homeowners.

The education courses come in two ways: Framework, which is $75, and eHomeAmerica which costs about $49 for co-borrowers and $99 for the primary borrower.

To qualify for CHAC assistance, you’ll need a household income that isn’t more than 80 percent of your preferred location’s area median income (AMI).

3. CRHDC

The Community Resources and Housing Development Corporation (CRHDC), also called the NeighborhoodLIFT program, is another program offering assistance to first-time homebuyers in Jefferson Counties, Douglas, Denver, Arapahoe, and Adams.

NeighborhoodLIFT provides homebuyer education programs and preferential help for teachers, military service members, and first responders. The best part is that people who qualify enjoy less restrictive income caps.

 

Colorado First-time Home Buyer Grants

Besides the homeownership schemes, there are also down payment assistance programs (DPAs) that provide loans and grants to enable home buyers to cover out-of-pocket expenses like down payment and closing costs.

These assistance programs are for low-income homebuyers. However, many programs have income caps that depend on the household size.

Considering the eligibility requirements for these DPA programs vary according to Colorado cities, you might want to ask your real estate agent or mortgage lender for what’s available locally.

However, some popular homebuyer grants in Colorado include:

• CHFA

The down payment assistance grants from CHFA provide about three percent of the mortgage amount as money you won’t have to repay. Suppose your mortgage amount is $400,000; with the CHFA down payment grant, you can get up to $12,000 for your upfront fees.

You can bump the CHFA down payment assistance grant to 4 percent if 3 percent isn’t enough. However, this bump will come as a second mortgage loan instead of a grant. Also, you’ll need to fully repay the loan when you pay your first mortgage, refinance, or sell the home.

Other actions might also trigger full loan repayment, but you don’t have to deal with monthly payments anytime soon.

• CHAC

While this agency focuses on loans rather than grants, it doesn’t indicate the highest amount they can give home buyers or the loan interest rates. However, its website specified that the loan is a lien or second mortgage on the intended property.

The loans offered under this program require monthly mortgage payments.

• Neighborhood GIFT

The NeighborhoodLIFT program offers a $15,000 down payment assistance on eligible properties in Jefferson County, Douglas, Denver, Arapahoe, and Adams. Qualified properties include townhouses, planned unit development (PUD), 1-4 unit properties, condominiums, and single-family detached homes.

NeighborhoodLIFT, CHAC, and CHFA require homebuyers to take home buyer education classes.

 

National First Time Buyer Programs

A first-time home buyer in Colorado must qualify for these nationwide homebuyer program loans below to enjoy state homebuyer assistance. However, some of these loans aren’t only for first-time homebuyers.

1. VA Loans

The United States Department of Veterans Affairs (VA) offers VA loans for veterans, active-service military members, and their spouses. This loan type doesn’t require mortgage insurance and down payments.

Although VA loans require no down payment, they include closing costs which some Colorado assistance programs cover.

2. Conventional Loans

Conventional loans are mortgages with stricter requirements and no government insurance. However, they have generous loan limits compared to government-backed mortgage programs.

The Freddie Mac Home Possible and Fannie Mae HomeReady programs are famous conventional first-time buyers’ loans. These loan programs offer more flexible insurance premiums for eligible buyers than most other loan types.

3.  USDA Loans

Moderate-to-low income intending homebuyers can purchase homes in the suburbs through the US Department of Agriculture (USDA) insured loans.

Although a USDA loan doesn’t need a down payment, it comes with closing cost assistance.

4. FHA Loans

Federal Housing Administration (FHA) loans are for borrowers with higher debt ratios and low credit scores compared to what conventional lenders will allow. However, conventional loan limits are higher than FHA loans.

The Federal Housinf Administration guidelines offer financing for borrowers with 500 scores, although some Colorado programs require credit scores between the 620 to 640 range.

 

Types of Down Payment Assistance for Intending Colorado Home

Colorado homebuyers should be aware of the down payment assistance type they receive. You’ll need to determine if you need to pay back the loan, the repayment amount to make, and the deadline, depending on the loan program and type.

Seeing as down payment amounts might seem too much, Colorado offers some assistance depending on the program type. Some of these programs include:

• Grants

Once you meet the requirements for a grant and have received disbursements, you don’t need to repay it. However, you might need to fulfill specific income guidelines or attend a first-time homeowners seminar. One popular down payment assistance grant program in Colorado is Boulders Solution Grant.

• Second Mortgage

Some assistance programs involve deferred payments made during the house sale or refinancing. Therefore, you’ll need to pay the second mortgage loan monthly alongside your primary mortgage payment. This program type is available statewide.

• Forgivable Second Mortgage

Also called a “soft” mortgage, the forgivable second mortgage is forgiven after a specific time once the homeowner meets the criteria, like staying in the property for a certain number of years.

If you fail to meet the criteria, you must repay the second mortgage when you refinance or sell. Denver’s metroDPA is an example of a forgivable second mortgage.

• Matched Savings Grant

Under this grant, the buyer puts down a certain amount matched with the loan. Usually provided by government entities and non-profit organizations, the borrower will have to meet some criteria to become eligible.

Matched savings grant criteria vary but include meeting specific income requirements, minimum credit scores, and attending financial education classes.

 

The Colorado First-time Homebuyer Programs and How They Work

The following are the approval process for most Colorado homebuyers assistance programs:

1. Complete the Program’s Education Requirement

Most Colorado assistance programs require intending homebuyers to attend seminars in homebuyer education on courses that will enable them to understand the homeownership requirements, potential pitfalls, and benefits.

2. Work With an Approved Lender

These homebuyers assistance programs work with approved lenders, so eligible prospective homebuyers will need to get mortgage approval from these lenders to receive the assistance.

Some program credit requirements might be more stringent than other loan programs that aren’t tied to assistance. If you’ve been struggling with poor credit or debt, you might want to meet the loan officer regarding the requirements to view other options.

3. Know the Income Limits

Colorado homebuyer assistance programs exist to help folks with low to moderate incomes. Therefore it comes with income limits, but they vary depending on your family size, the location’s income, and other program aspects.

You might want to check your preferred program’s website to discover the current limits.

4. Discover the Payback Requirements

You’ll need to pay back some loans and second mortgages when certain events occur, like mortgage refinancing or home sale. Other loan types become due when you’ve stayed in the home for a certain number of years.

Due to the high variability, it’s best to find out the payback requirements. Note that interest rates might be higher compared to regular loan programs.

 

First-time Home Buyers Assistance In Colorado Major Cities

Depending on the Colorado city you prefer, there are city-specific assistance programs for first-time homebuyers. Ensure to check for the one that applies to your preferred city, such as:

• Denver

Denver’s down payment program extends eligibility to borrowers with up to $150,000 income. The best part is, it doesn’t come with a house purchase limit and is for every homebuyer interested in the program.

This program provides about 5 percent assistance for a primary residence in the form of a three-year forgivable second mortgage.

• Fort Collins

Fort Collins no longer offers direct loans but works with the Impact Development Fund, metroDPA, and CHFA. A four-person household will need to make $95,875 for those living in non-urban areas or $76,700 in urban areas to become eligible for up to a $25,000 down payment in the city.

• Aurora

Down payment assistance programs in Aurora are for people who haven’t owned a property in the last three years. You can get about $10,000 in a down payment once you meet all the criteria. However, a household of four will need about $79,900 income to qualify.

 

Final Thoughts

While comparing different assistance options and loan programs, keep an eye on new Colorado mortgage rates. Make sure you compare loan options from various mortgage lenders for an attractive rate.

As a first-time home buyer in Colorado interested in a Colorado homebuyer assistance program, it’d be best to register for one of the online homebuyer education courses. Then check through various mortgage lenders once you get your certificate of completion before applying for any of the assistance programs. Good luck!

Are you ready to be a first-time homebuyer in Colorado? Consider working with a local and experienced real estate company like Homes by Ardor. We have the best homes for sale in Colorado and will help connect you to mortgage lenders to help facilitate the homebuyer assistance programs.

Go through our website today to see available listings in your preferred Colorado city.