The Best First Time Homebuyer Financing Programs in Colorado
Looking to buy a home in Colorado? We don’t blame you. There’s a lot Colorado has to offer: the gorgeous mountain scenery, job opportunities, craft beer breweries, and 300+ days of sunshine. In 2018, Colorado welcomed nearly 240,000 residents from other states, making it one of the top ten fastest-growing states in the country. Specifically, millennials are flocking to the Centennial State the most.
With all that Colorado has to offer, it makes sense that many people want to own a home here. However, new and veteran residents who want to buy their first home in Colorado may feel a little lost and overwhelmed. Colorado has high home prices and rent prices (which isn’t a new thing), but that doesn’t mean that owning a home is out of reach. Check out these first time home buyer programs in Colorado that can make the process a little easier and more affordable.
First Time Home Buyer Financing Programs
The Colorado Housing and Financing Authority (CHFA) works with a network of government-approved lenders to offer loans and assistance to new homeowners in Colorado. As long as you haven’t owned or co-owned a home in the past three years, you qualify as a new homeowner. All you have to do is complete a homebuyer education class before closing on your home, which you can do online or in-person.
CHFA has a variety of options for loans, down payment assistance, and closing cost assistance. Here’s a quick snapshot of some of the programs they offer.
FirstStep and SmartStep
FirstStep pairs a 30-year mortgage term with fixed interest rates. First-time homebuyers may be able to qualify for FirstStep with no credit score, and as little as $1,000 is needed for the down payment. This is a great option for those with limited savings and average income.
Like FirstStep, homebuyers need to contribute only $1,000 for the down payment. SmartStep features the lowest mortgage interest rates of all CHFA programs. If you have a credit score of 620 or above, you might choose this program over FirstStep.
Preferred is another option for those with a credit score of 620 or above who wants cheaper mortgage insurance. If you meet the income limits and can make a 3% down payment, you’ll lower your mortgage insurance prices. The CHFA Advantage program works similarly but requires a 680 credit score for eligibility.
Have a credit score of 620 or higher, but make too much money to qualify for other CHFA programs? Consider HomeOpener, which rewards strong credit with no limits to the home purchase price.
HomeAccess and Section 8
For first time home buyers living with permanent disabilities, HomeAccess helps to lower the upfront cost of homeownership by lowering the down payment cost and offering up to $25,000 in down payment assistance.
The Section 8 program was created to help renters looking to buy. If you’ve used Section 8 rental vouchers for at least one year and you have a credit score of 620 and above, you should qualify for lower down payments and assistance.
If you’re using one of the above programs, you’re also eligible for further assistance through a Down Payment Assistance (DPA) grant. You can get up to 4% of your CHFA mortgage amount in a grant to curb initial costs. Plus, you don’t have to pay the money back.
Similarly, the CFHA Second Mortgage Loan Grant offers homebuyers a second mortgage of up to 5% of their primary loan amount, and it doesn’t carry any interest. It does require repayment, however.
National First Time Home Buyer Financing Programs
Don’t rule out national loan programs either! These federal home buyer programs are available to anyone.
Federal Housing Administration (FHA) loans
FHA loans are a common resource for first time home buyers who have lower credit scores. If you have a credit score of 580, you’ll need a down payment of 3%; with a credit score of 500, you’ll need a down payment of 10%. Mortgage insurance is required for the life of the loan and can’t be canceled.
Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac are government-created conventional home buyer loans that come in a variety of options, with similar benefits. For example, the HomeReady loan from Fannie Mae requires a down payment as low as 3%, a credit score of at least 620, and an income near or at the U.S. median. The Home Possible loan from Freddie Mac requires a credit score of at least 660 for a 3% down payment. Or, if you don’t have credit, you may be able to make a minimum 5% down payment.
Find your home with West Line Village
Ready to own your first home in Colorado? Stop by West Line Village, a brand-new community of modern townhomes in Lakewood. Whether you work in downtown Denver or want to be closer to the mountains, West Line Village is for you. Contact us to see the West Line Village neighborhood in Lakewood and take a tour of the property for yourself.