Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
From the dramatic peaks of our mountain towns to the buzz of our growing cities, Colorado’s housing market is as diverse as the state itself. But buying your first home is a big milestone — one that can feel overwhelming without an experienced guide to the local market, mortgage options, and the buying process.
This first-time homebuyer guide explains the key steps involved, including financial requirements, mortgage preparation, and the path to closing, helping you achieve your homeownership goals.
So, what is a first-time homebuyer, exactly? It’s a common misconception that you have to be brand new to homeownership. In reality, the definition is much more flexible.
According to the U.S. Department of Housing and Urban Development (aka HUD), you qualify as a first-time homebuyer if you have not owned a principal residence in the three years before your new closing date. This rule opens the door for many repeat buyers who are restarting their homeownership journey.
This three-year rule creates first-time homebuyer advantages for people who owned property in the past but have been renting or living with family more recently.
Someone who only owned a home with a former spouse also qualifies under this rule. Additionally, someone who only owned a home that did not sit on a permanent foundation is considered a first-time buyer. And certain manufactured homes fall into this category.
Understanding these details helps people who are buying a home for the first time realize they qualify for special programs and benefits. Knowing your status can help you find favorable loan terms and financial opportunities.
Ready to plant roots in Colorado? Buying your first home here comes with some significant perks. If the high cost of living feels like a hurdle, don’t worry — there are state and local programs specifically designed to make homeownership more accessible.
Common first-time homebuyer benefits include low- or no-down-payment options, lower credit score requirements, and down payment assistance programs that help reduce upfront costs. You may also qualify for grants or forgivable loans that provide cash for your purchase. As a result, many buyers can purchase a home without needing a lot of savings.
Programs offered through the Colorado Housing and Finance Authority (CHFA) provide excellent support for buyers. For example, the CHFA’s down payment assistance grant provides up to the lesser of $25,000 or 3% of your first mortgage with no repayment required. Additional programs may be available in cities such as Denver, Aurora, and Boulder.
To be eligible for a CHFA loan, borrowers must complete a CHFA-approved homebuyer education class, which covers the financial and practical responsibilities of owning a home. Working with an approved lender can help you find the right program for your budget and a path to reduce your out-of-pocket expenses.
Recommended: Colorado First-Time Home-Buying Assistance Programs
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Buying a home can feel like a marathon, but breaking it down into a series of sprints makes it more manageable. This guide outlines the entire journey, from your initial financial check-up to the moment you unlock the front door of your new home.
Before you start browsing listings, the first step is to take an honest look at your personal finances to make sure you’re ready to buy. You’ll need savings and income to cover the down payment, mortgage payments, property taxes, homeowners insurance, and maintenance fees.
Check that you have good credit, which can lead to better loan terms from lenders. Determine if you plan on staying in the new home for a long period, which will allow home equity to increase through appreciation and regular mortgage payments.
Your debt-to-income (DTI) ratio should be no more than 50% to qualify for a government-backed loan, or 43% for a conventional loan. Checking these indicators helps you confirm your readiness before you apply.
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It’s easy to focus on the listing price, but setting a sustainable budget means looking at the bigger financial picture. Your budget should account for your down payment and a monthly mortgage payment that fits comfortably within your finances. You’ll also need to factor in property taxes, any homeowners association dues, annual maintenance, and moving expenses. Additional costs may include new furniture, appliances, or landscaping. A home affordability calculator can help you figure out how much home you can afford.
Many buyers aim for a 20% down payment to avoid private mortgage insurance (PMI). However, that’s not always necessary. For many conventional mortgages, you can put down as little as 3%, and some government-backed loans require no down payment at all. A down payment calculator is helpful to determine the down payment based on the price of the home you are considering.
If you move out of state, it’s good to compare the local cost of living in that region.
Not all mortgages are created equal. Getting familiar with the different loan types will help you find the one that best fits your financial situation.
Regardless of the type of mortgage loan you choose, the components of the payment are the same. The principal is the amount you borrow, and the interest is the fee the lender charges you for the loan. Here are some of the different loan options available:
Shopping around for a lender is just as important as shopping for a house. Comparing multiple options helps you find the right balance of competitive rates, fair fees, and great service.
As you review offers, it’s important to understand the annual percentage rate (APR), which includes the interest rate plus certain lender fees and discount points. Keep in mind their customer ratings too; finding a responsive lender ensures a smoother transaction when you find a house you love.
Before you start touring homes, it’s essential to get your proverbial ducks in a row. Prequalification provides a rough estimate of how much you may be able to borrow based on self-reported information. You can get prequalified with multiple lenders as you shop around.
The mortgage preapproval process is more formal and requires a lender to verify your income, assets, debts, employment history, and credit profile. A mortgage preapproval letter demonstrates to sellers that you’re financially qualified and ready to move forward with a purchase, which can be an advantage in a competitive housing market. It also helps keep your home search focused on properties within your budget.
Understanding the difference between prequalification vs. preapproval is helpful before you get too far into house hunting.
Think of a real estate agent as your guide and advocate throughout this process. An agent can tailor the home search so that you spend less time looking at homes that don’t meet your criteria. They have access to new listings that aren’t yet on the market and may be willing to preview homes for you. A real estate agent can also help you navigate the intricacies of contract negotiations and paperwork.
Because of recent changes in industry rules, it’s advisable to understand how real estate commission fees work and how buyer agents are compensated before you enter into an agreement.
With your preapproval in hand, the fun part begins: Start browsing listings online and attending open houses with your agent.
Consult the Best Affordable Places in the U.S. series for information on suitable areas in any state. As you search, research neighborhoods, school districts, commute times, and other factors that may affect your daily life. When touring homes, look carefully for signs of structural damage or expensive repairs.
Also take the time to understand your rights as a buyer. Federal laws prohibit housing discrimination based on factors such as race, religion, national origin, sex, disability, or family status. If you encounter concerns during your search, document any obstacles, such as an agent refusing to show houses in certain areas or a seller claiming a home is unavailable when it remains listed.
Found the one? Congrats! Your agent will now help you draft a competitive offer.
The offer includes your proposed price, contingencies, and a target closing timeline. Your agent will review recent sales of similar homes to help determine a fair offer price. Contingencies protect your deposit if major problems arise with financing or the property condition later in the process.
If your offer is accepted, you’ll enter into a purchase contract and submit an earnest money deposit, which is held in an escrow account.
Think of a home inspection as an insurance policy against hidden surprises (before your actual insurance kicks in). During the inspection, a professional evaluates major components of the property, including the roof, foundation, plumbing, and electrical systems. The cost is between $300 and $500 and is paid by the buyer.
Attending the inspection allows you to ask questions about regular maintenance tasks and minor flaws. If the inspector finds severe structural damage, you can negotiate repairs or withdraw from the purchase, depending on the terms of the contract.
While an inspection checks the home’s condition, an appraisal confirms its value. It ensures your lender is comfortable with the loan amount relative to the home’s worth.
The lender will typically order the appraisal and assign an independent appraiser to ensure objectivity. As with an inspection, an appraisal involves someone visiting the property, which you or your agent will help coordinate. The buyer usually pays the cost of the appraisal, which is typically $300-$600.
Closing usually requires proof of homeowners insurance, including coverage for state-specific risks such as wildfires or winter storms in Colorado. You’ll perform a final walk-through to ensure the house is in acceptable condition.
Your lender will provide a Closing Disclosure summarizing the final loan terms and fees. At closing, you’ll sign the mortgage documents and pay any remaining closing costs. The escrow and title company will record the transfer of ownership with the county and provide the keys to your new home, completing the home-buying process.
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Once you’ve completed the closing process, your journey as a new homeowner begins. Staying organized during your move can help ensure a smooth transition. Start with a first-time homebuyer checklist to track key tasks such as transferring utilities for water, gas, and electricity and submitting a change of address with the post office.
Finally, remember that routine upkeep prevents minor issues from turning into expensive disasters. Taking care of your property protects your investment and can increase your home equity over time. Change the door locks, replace the furnace air filters, and clean out the rain gutters.
Buying your first home in Colorado might seem daunting, but it’s entirely achievable with a clear plan and the right support. While the local real estate market can present affordability barriers, numerous state programs and flexible mortgage options exist to support you. Preparing your credit score and saving for a down payment are good initial steps. With the right preparation, you can confidently navigate the market and find a home that fits your budget.
Conventional loans typically require a credit score of at least 620, while FHA loans allow you to qualify with a score of 580 with a 3.5% down payment or 500 with a 10% down payment. VA and USDA loans don’t have a set minimum.
The homebuying process begins by reviewing your finances and credit score, then getting preapproved for a home loan with a lender. Next, you work with a real estate agent to search for homes and submit an official offer when you find the right property. After your offer is accepted, you complete a home inspection, secure homeowners insurance, and attend closing to finalize the purchase.
Common mistakes include skipping mortgage preapproval, checking your credit score too late, and getting estimates from only one lender. Underestimating closing costs and ongoing maintenance expenses can also strain your budget. Finally, waiving the home inspection or making a large purchase right before closing can create issues with loan approval.
The primary rule to qualify as a first-time homebuyer is that you cannot have owned a principal residence in the past three years. Most assistance programs also require you to occupy the property as your primary residence. You must meet lender criteria for creditworthiness and income stability, and to be eligible for Colorado Housing and Finance Authority grants and loans, you’ll need to complete a homebuyer education course.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Take the first steps to homeownership today. Get prequalified for an FHA loan online.
