Programs for first-time home buyers in Colorado – Forbes Advisor

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If you live in Colorado and are a first-time home buyer, you may be eligible for a variety of state and local mortgage programs. If you qualify, you can get loans and grants to help you meet down payment and closing cost requirements, even if you don’t have perfect credit or substantial cash reserves.

You may also be able to combine these benefits with a loan backed by the Federal Housing Administration (FHA), US Department of Agriculture (USDA), or Department of Veterans Affairs (VA) if you don’t have enough money for a traditional 20%. Down payment.

First-time homebuyer programs for Colorado residents

There are many programs for first-time home buyers offered by state, provincial, and city organizations. Many programs serve as a second mortgage to help pay for the closing costs and down payment of your first home loan. In other situations, you may get favorable terms for a first loan.

You may be eligible for the following programs if you have never owned a home or have not owned a home for at least three years.

Colorado Housing and Treasury Department

The Colorado Housing and Finance Authority (CHFA) ​​offers up to 100% financing for mortgage loans with down payments as little as 3% of the amount borrowed. These loans can have fixed interest rates and 30-year terms.

The CHFA also offers a type of second mortgage loan to help with your down payment and closing costs. Your loan proceeds can be up to 4% of the amount of your first mortgage. It’s also possible to defer repayment until you’ve paid off your main loan, refinanced, or sold your home.

Remember, borrowers must contribute at least $1,000 to a loan and meet other income, credit, and credit insurance requirements to be eligible for select products. Borrower minimum requirements include:

  • A credit score of at least 620
  • Attend approved homebuyer training prior to graduation (in person or online)
  • Do not exceed the CHFA income limits on the borrower’s total income

The general guidelines of the CHFA are similar to most programs for first-time home buyers. However, your lender may have additional underwriting guidelines that you must meet.

Colorado Housing Assistance Corporation

Colorado Housing Assistance Corporation (CHAC) offers second mortgage loans to low- and middle-income households to reduce the upfront burden of closing costs and down payments. Similar to the CHFA program, the borrower must make a minimum contribution of $1,000 — but interest rates are low and repayment schedules can be flexible.

Your primary mortgage lender will apply for this program on your behalf if you are eligible.

Colorado housing company

New and existing homeowners across the state can more easily access state-insured mortgages through Colorado Housing Enterprises (CHE). You can consider these loans if you are struggling to meet down payment requirements for a traditional mortgage.

This organization is part of the Community Resources and Housing Development Corporation (CRHDC), which has been helping Coloradans afford housing since 1971.

Some of the programs for a first-time home buyer in Colorado include:

  • FHA Insured First Mortgage: This is an FHA loan for first-time buyers who have a steady income and can afford a down payment as low as 3.5%.
  • VA loan: A VA-backed purchase loan may not require a down payment and may not have ongoing mortgage insurance premiums.
  • 502D Direct Housing Loan Program: Households with very low or low incomes may qualify for funding. This is a USDA rural community only loan.
  • 502 guarantee loan: This is another USDA Section 502 loan program that may not require a down payment or cash reserve.
  • Down payment assistance loan program: This is a 10-year second mortgage and offers up to $10,000 in funds to help with your down payment and closing costs.
  • 90/10 loan program: This can help you reduce your mortgage insurance liability with up to 90% first mortgage financing and up to 10% second mortgage financing.

NEWSED Community Development Corporation

Denver metro area residents can receive up to $10,000 in assistance through NEWSED. This second mortgage can be used for:

  • closing costs
  • down payment
  • Interest purchase down
  • capital reduction

county and city programs

There are also many county and city level homeownership programs worth inquiring about. The U.S. Department of Housing and Urban Development (HUD) lists over 30 initiatives that residents may be eligible for. Some of the participating areas are:

  • Arapahoe County
  • boulder
  • Boulder County
  • durango
  • FortCollins
  • Greely
  • Pueblo

Program benefits and minimum qualifications may vary. Contact your local housing authority for more information.

First-time homebuyer grants for Colorado residents

You should also look for grants for first-time homebuyers, as these typically do not require repayment. Unfortunately, however, these are less common than down payment assistance loans for first-time homebuyers.

The following grants can help you meet down payment requirements.

CHFA down payment support grant

The CHFA grant program can cover up to 3% of your first mortgage payment with no repayment required.

NeighborhoodLIFT

CRHDC’s NeighborhoodLIFT program offers up to $15,000 in down payment assistance in the Denver-Aurora area. This program is available to first-time and returning homebuyers.

Participating counties include:

  • adams
  • arapahoe
  • Denver
  • Douglas
  • jefferson

It’s technically a second mortgage, but it can be fully forgiven if you live in the house for five years. Under current program rules, each year of stay waives 20% of the loan balance. If you sell your home early, you must pay the balance immediately.

National Homebuyer Fund

The National Homebuyers Fund (NHF) offers down payment assistance for most home purchase and refinance loans in the United States. NHF can take up to 5% of your mortgage loan amount and waive the balance immediately or after several years.

FHA, VA, USDA, and conventional mortgages may be eligible.

How to Buy a Home in Colorado

Whether you’re moving to Colorado or currently renting in the state, the home buying process is similar.

By following these steps, you can choose the best mortgage and not miss any assistance programs:

  1. Compare utilities. You may be eligible for several statewide and local programs and grants. It may also be worth considering FHA, VA, and USDA federal loan programs for additional benefits.
  2. Find a participating lender. Not every lender works with every program, so make sure you do your research to compare participating lenders. By considering multiple mortgage lenders who work with first-time homebuyers, you’ll have an easier time finding a good deal.
  3. Apply for first-time homebuyer help. You usually start the application process as soon as the house is under contract. As a rule, you can expect the finalization process to last three weeks. Your lender will help with this step.
  4. Take a homebuyer training course. These programs typically require completion of an in-person or online course for first-time buyers. It is possible to complete this course before making a purchase offer and the certificate of completion is valid for up to 12 months.
  5. Complete your loan. If you are approved, you will be required to sign the closing documents once your lender has finalized your loan terms and homebuyer program benefits.

Related: What is the first home purchase loan and why is it no longer available?

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