Colorado First-Time Home Buying Assistance Programs for 2024

Colorado First-Time Home Buying Guide

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    By Kim Franke-Folstad

    (Last Updated – 03/2024)

    There’s something for just about everyone in Colorado — especially those who love the great outdoors. The state is known for its ski resorts, hiking and biking trails, and 300 days of sunshine each year.

    But for first-time homebuyers in Colorado, putting down roots can be a challenge, whether they’re hoping to find a home in a mountain town, in the suburbs, or in bustling downtown Denver. According to Redfin, the median home sales price in Colorado in January 2024 was $591,500, a 7.8% increase in 12 months. The most significant price increases were in the towns of Steamboat Springs, Northglenn, and Grand Junction. On average, across the state, 17.7% of homes were selling above the list price.

    Fortunately, Colorado homebuyers may be able to get financial help through programs offered by the state and some cities and counties. There also are longstanding federal programs that could improve a buyer’s chances of success.

    Recommended: First-Time Homebuyer Guide

    Who Is Considered a First-Time Homebuyer in Colorado?

    First things first: The definition of first-time homebuyer is more expansive than it seems. For most programs offered in Colorado, and elsewhere, applicants are considered first-time homebuyers if they haven’t owned a home for the past three years. Let’s look at some of the programs designed to get first-time homebuyers a home mortgage loan or help with closing costs.

    6 Colorado Programs for First-Time Homebuyers

    Most first-time homebuyer programs in Colorado are designed to help low- to moderate-income buyers who need help coming up with a down payment or closing costs.

    Program participants typically must meet eligibility requirements regarding their income, credit scores, and debt-to-income (DTI) ratio. There also may be limits on how much the home costs, and it usually must be owner occupied. Also, at least one of the buyers must complete a homebuyer education course.

    Recommended: Understanding Mortgage Basics

    1. CHFA FirstStep and FirstStep Plus

    The Colorado Housing and Finance Authority (CHFA) provides several assistance options for first-time buyers. The FirstStep and FirstStep Plus programs offer qualifying first-time homebuyers, veterans, and buyers who are purchasing in a targeted area a 30-year fixed-rate Federal Housing Administration (FHA) loan along with the opportunity to apply for a deferred second loan to put toward their down payment or closing costs.

    The FirstStep Plus no-payment, 0% interest second mortgage may be for up to 4% of the first mortgage amount.

    Qualifications include:

    •   Borrowers must have a 620 or higher credit score

    •   Maximum DTI of 50% to 55% (depending on credit score)

    •   Borrowers must meet household income and purchase price limits

    •   Second mortgage must be paid in full upon a sale or refinance, or if property is no longer the borrower’s primary residence

    •   Must attend an approved homebuyer education class

    •   Must make a minimum borrower financial contribution of $1,000 toward the purchase of the home (may be a gift)

    •   No cosigners or non-occupying co-borrowers

    For more information, go to the CHFA site or contact your regional CHFA office for answers to general questions.

    To apply, contact a participating lender .

    2. CHFA HomeAccess and HomeAccess Plus

    The HomeAccess and HomeAccess Plus program offers qualifying first-time homebuyers and veterans a 30-year fixed-rate USDA, VA, or FHA loan that may be paired with a 0% interest second mortgage of up to $25,000 for down payment/closing cost assistance. Applicants must have a permanent disability or a child with a permanent disability.

    Qualifications include:

    •   Borrowers must have a 620 or higher credit score

    •   Maximum DTI of 50% to 55% (depending on credit score)

    •   Must meet income and purchase price limits

    •   Must attend a homebuyer education class

    •   Must make a minimum borrower contribution of $500 toward the purchase (may be a gift)

    •   No cosigners or non-occupying co-borrowers

    See the flyer to get more information and apply with one of the two participating lenders.

    3. CHFA SectionEight Homeownership

    Some public housing authorities (PHAs) allow would-be homeowners to use a Section 8 housing choice voucher to buy a home or pay monthly homeownership expenses instead of paying rent. The amount of money that Section 8 pays for a home is the same as the amount it would pay for rent. Not all PHAs do this, so check with your local PHA if you are in Section 8 housing. This may be paired with other first-time homebuyer programs that provide down payment and mortgage assistance.

    4. Other CHFA Homebuyer Programs

    If you aren’t sure whether you’ll qualify as a first-time homebuyer, here are some other CHFA programs you might want to look into:

    CHFA SmartStep and SmartStep Plus offers eligible borrowers a 30-year fixed-rate FHA, VA, or USDA loan that may be paired with down payment assistance in the form of a second mortgage.

    CHFA Preferred and Preferred Plus offers homebuyers a 30-year fixed-rate Fannie Mae HFA Preferred or Freddie Mac HFA Advantage loan that may be paired with a second mortgage for down payment assistance.

    CHFA Preferred VLIP is only for very low-income borrowers. It offers a 30-year fixed-rate Freddie Mac HFA Advantage loan that may be paired with a second mortgage for down payment assistance.

    Here are the income limits . To apply to a specific program, you’ll have to work with a participating lender .

    5. CHAC Down Payment Assistance Program

    The Colorado Housing Assistance Corporation (CHAC) provides low-interest second loans to low- and moderate-income first-time homebuyers who need help with their down payment and closing costs.

    Qualifications include:

    •   Borrower income limits are set at 80% of the area median income in most communities and 115% of the area median in Arvada

    •   Must make a minimum borrower contribution of $1,000 ($750 for disability program), and this amount generally cannot be a gift

    •   Must attend a CHAC homebuyer education class

    •   Must disclose all income sources for occupants over 18

    •   Must provide proof of legal residency for all household members if requested

    •   Home price and asset limits apply

    For more information, this page . Applications are submitted through your mortgage lender.

    6. Mortgage Credit Certificate

    First-time homebuyers in Colorado also may benefit from obtaining a mortgage credit certificate through a CHFA-approved lender. Borrowers can use a certificate to claim a portion of their mortgage interest, dollar for dollar, up to $2,000, as a federal tax credit every year for the life of their loan.

    You can apply for the credit certificate when you take out a home loan through a participating lender .

    Other Colorado Homebuyer Programs by Location

    If you’ve already chosen the Colorado city or county you hope to make your home, you also may want to research local buyer assistance programs.

    If you can’t find assistance in your chosen location, check back occasionally for new offers. Some first-time homebuyer programs base their opportunities (and deadlines) on the funds they expect to become available. When their money runs out, they may press pause.

    Aurora Assistance Program

    Aurora’s Home Ownership Assistance Program was created to assist low- and moderate-income first-time homebuyers. It provides up to $10,000 in assistance to buyers in Aurora who need help covering down payment and closing costs. For information on benefits and requirements, you can email [email protected], or call 303-739-7000.

    Boulder Programs

    The city of Boulder is offering several assistance opportunities to low-, moderate-, and higher-middle-income first-time homebuyers. The programs include down payment assistance loans and grants, as well as a program that offers homes for sale at below-market prices to income-eligible owner-occupiers.

    You can get eligibility requirements and how to apply by going to the program’s website . If you’re planning to purchase in Boulder County but the home is outside the city limits, ask your lender about other programs that may be available to you.

    Douglas County Down Payment Assistance

    The Douglas County Housing Partnership offers a down payment assistance program to first-time homebuyers, with preference given to borrowers who currently live and/or work in the county. For information on the benefits and requirements, check out the website or call the partnership at 303-784-7857.

    Eagle County Down Payment Assistance

    Eagle County’s program has a few variations, and your assistance may be based on the type of first mortgage you obtain, where you plan to live, your income, and other factors. Get more information at the program’s website . If you have questions, you can email [email protected] or call 970-328-8770.

    El Paso County Turnkey Plus Mortgage Program

    The El Paso County “Turnkey Plus” Mortgage Program offers a partially forgivable down payment assistance loan to people who want to purchase a home in El Paso County, including in Colorado Springs. Check out the program’s website or email [email protected].

    MetroDPA Program

    The MetroDPA down payment assistance program is for homebuyers with up to $188,250 of qualifying income who purchase a home in the Front Range, from Castle Rock to Wellington. For information on benefits and eligibility requirements, check out the program’s website .

    How to Apply to Colorado Programs for First-Time Homebuyers

    The way to get more information about each program, and apply, is described above.

    Often an approved lender is the go-to for assistance programs.

    Recommended: Understanding Mortgage Basics

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

    US Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    First-Time Homebuyer Stats for 2024

    You’re probably curious about where you fit amid the mix of homebuyers out there. Here are some stats:

    •   Percentage of buyers nationwide who are first-time buyers: 32%

    •   Median age of first-time homebuyers nationally: 35

    •   Median home price in Colorado: $591,500

    •   Median gross rent: $1,594

    •   66.2% of Colorado housing units were owner-occupied

    •   Average credit score in Colorado: 731

    Additional Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. IIt may be possible to borrow from the 401(k) plan that your employer sponsors or take a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    The Takeaway

    A robust assortment of mortgage and down payment help in Colorado allows qualifying first-time homebuyers to hit paydirt. Others will have to blaze their own trail to find a mortgage that’s a good fit. Keep in mind that borrowers who go with a conventional loan don’t necessarily have to come up with a 20% down payment. (And most buyers don’t.)

    Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

    SoFi Mortgages: simple, smart, and so affordable.

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    Should I take first-time homebuyer classes?

    Yes! Being informed is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help; in fact, they are required for certain government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they can qualify. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications.

    Is there a first-time homebuyer tax credit in Colorado?

    Yes. The CHFA administers a mortgage credit certificate program that allows qualifying borrowers to claim a portion of their annual mortgage interest as a federal credit every year for the life of their loan.

    Is there a first-time veteran homebuyer assistance program in Colorado?

    The CHFA’s programs offer homebuyer benefits for veterans. VA home loans are available nationwide to eligible service members, veterans, and eligible surviving spouses.

    What credit score do I need for first-time homebuyer assistance in Colorado?

    Most homebuyer programs offered by the Colorado Housing and Finance Authority require a minimum 620 credit score. But requirements may vary from one program or organization to the next, and some programs use criteria other than credit scores to determine a borrower’s eligibility. You can check with the organization or lender offering first-time homebuyer assistance to get specific financial requirements.

    What is the average age of first-time homebuyers?

    The median age of first-time buyers is 35.

    Photo credit: iStock/haveseen

    *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.

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    Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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