Revolutionizing · Modernizing · Simplifying
Revolutionizing · Modernizing · Simplifying
Some people are sitting on the sidelines right now waiting for rates to drop, waiting for prices to drop, waiting for the perfect moment. And honestly, I get it. But here is the thing. There are programs available in Colorado right now that can get a first-time buyer into a home for around a thousand dollars out of pocket. Like, actually. So let's talk about what these programs are, how they work, and, more importantly, the part nobody really walks you through before you sign.
Because that part matters a lot.
Colorado Housing and Finance Authority, CHFA, is the big one in this state. If you have been in a conversation about buying your first home in Colorado, someone has probably said the name. And for good reason.
Here is what CHFA actually does. It offers a 0% down loan, meaning you are not coming to the table with a traditional down payment. On top of that, they offer what are called second mortgages to help cover closing costs. Some of those seconds are forgivable, meaning under certain conditions they disappear entirely. Some are not forgivable, meaning you will pay them back eventually, either over time or when you sell or refinance.
The credit requirement sits at 620 and above. Not perfect credit, but not a disaster either. 620 is workable for a lot of people who feel like homeownership is not in reach right now.
And the big number: if everything lines up, you can get through an entire transaction for around
The eligibility catch is pretty standard. You cannot have owned a home within the last three years. So if you sold a place in 2022 and have been renting since, you might actually qualify again now. Worth running that math.
Metro DPA works on a similar structure to CHFA. Down payment assistance, help with closing costs, similar income and eligibility requirements. It is just not as widely used across Colorado, and honestly it is not as widely known, which is a little surprising given that it covers the metro area well.
If your lender brings up Metro DPA, do not tune out. Compare it against CHFA side by side. Sometimes the terms on the second mortgage or the assistance amount shake out slightly differently depending on your specific situation, your loan amount, your income, your county. A good loan officer will run both for you.
FHA loans are not just for first-time buyers, and this is the part people miss. You need 3.5% down, so it is not zero like CHFA, but the credit requirements and underwriting guidelines are generally more forgiving.
Here is the flexibility piece that most buyers do not realize. You can use an FHA loan even if you have owned a home before, with one main catch: you cannot currently have an existing FHA loan on another property unless you are living more than 100 miles away from it. So if you are relocating from, say, Colorado Springs to Denver and still have a home down south, there is a conversation worth having with your lender about whether FHA works for your situation.
For someone who does not have three years of non-ownership under their belt but still needs help with the down payment, FHA is often the path.
This one flies under the radar more than it should. Fannie Mae's Home Ready program is a conventional loan with just 3% down. The credit requirements are a bit higher here compared to FHA or CHFA, so you need to be in pretty decent shape on that front.
But here is why it is worth your attention. Mortgage insurance on a conventional loan disappears once you hit 20% equity in the home. With FHA, depending on your loan terms, that mortgage insurance can stick around for the life of the loan. That is real money over time. If your credit is solid enough to qualify for Home Ready, the long-term cost comparison often swings in its favor.
All of these programs are real. All of them can genuinely help. But I am always telling people the same thing, and I will say it here too. Low equity at the start means you need to hold this property longer before you sell.
Think about what happens when you put little to nothing down. You are starting with minimal equity. Add in closing costs when you eventually sell, realtor commissions, any market softness, and you could easily be upside down or breaking even if you try to sell too soon. That is not a disaster, but it is a problem if life changes force your hand.
My standard suggestion is at least five years before you sell. Five years gives you time to build real equity through a combination of principal paydown and, hopefully, some appreciation. It gives the market time to work in your favor. It keeps you from being stuck in a corner.
This is not doom and gloom. It is just the honest version of the conversation that sometimes gets skipped when everyone is excited about the low down payment number.
If you are buying with CHFA or FHA and you know you might need to move in two years for work or family, that changes the math significantly. Renting might actually be the smarter play in that window, and I will always say that out loud even when it is not the popular thing to say.
If you are in Colorado and you have not owned a home in three years, CHFA should be one of the first conversations you have with a lender. Get pre-qualified, see if your credit is at 620 or above, and ask them to run the numbers with one of the forgivable seconds if you qualify. The difference between walking in with
If your credit is strong and you can manage 3% down, get the Home Ready comparison done alongside CHFA. Sometimes the mortgage insurance savings on the conventional side make it worth the slightly larger down payment.
And if you have owned before but it has been three years, do not assume you are out. Check the timeline. You might be eligible again and not know it.
The programs exist. The money is available. The question is just whether the terms fit your actual life plan, your actual timeline, your actual situation in this market right now. That is the part worth slowing down on before you jump.
And if you are working with a lender who is not walking you through all of these options, that is worth knowing too.