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It comes with impressive perks, like 0% down payment and a set interest rate. The interest rate currently sits at 4.5%, though that is subject to change based on market and Prime Rate fluctuations. Before we dive into the programs designed specifically for Colorado residents, we’ll touch on a handful of national home buyer programs that anyone can access.
“Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620. Most lenders use a debt-to-income ratio and do not like this ratio to exceed 43%, depending on the program. For example, let’s say that you bring in a gross paycheck of $4,000 monthly . Your total amount of debt, including the mortgage, credit card payments, and car payments is $1,750. Divide the debt by the income and you get a DTI ratio of 43%.
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Once you reach an 80% loan-to-value ratio, you can also cancel monthly mortgage insurance payments. With a HomeReady® loan, you must have private mortgage insurance at the time of purchase. Once you’ve accrued 20% equity in your new home, you can cancel it. In addition, most programs let you use gifted money or down payment assistance to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.
You’ll need as little as $750 to put toward the purchase of the home, which can be your own funds or gift funds. If you sign up for automatic payments through the CHFA’s Automated Clearing House payment program, you could reduce the amount to $500. If you qualify for HomeAccess, you could also be eligible for an additional $25,000 CFHA HomeAccess Second Mortgage. That will help with your home’s down payment and closing costs. These are 97% LTV, or loan-to-value, indicating that your down payment will only have to be 3% of the home’s value.
CHFA HomeAccess
If you’re eligible for a VA loan or a USDA loan , you may not need any down payment at all. For example, if you’re financing $200,000, you may qualify for up to $8,000. Provides down payment assistance of up to 3% of your first mortgage.
So long as you’re a first-time home buyer with a credit score of at least 620 and have used Section 8 rental vouchers for at least one year, you could qualify. As with all CHFA programs, you also need to complete a home buyer education class online or in-person before you can sign any purchase contract. Saving a down payment is a huge burden for first-time home buyers.
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Federal programs can provide a viable option for borrowers with credit challenges or who qualify for special benefits. Meanwhile, if you sell, refinance, or trigger other conditions, you’ll have to repay your loan balance in full at that time. You’ll normally need a credit score of 620, though you may find a CHFA-approved lender that will accept 580.
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CHFA FirstStep Program
These loans are second mortgages and typically require monthly payments. Federal mortgage programs provide another option for first time home buyers in Colorado. For example, if you’re struggling to meet the credit requirements of your local state programs, a federal program might provide more flexibility. Here are a few options that are popular with first time home buyers because they accept low credit scores and offer down payment assistance. If you need help renting, chances are you’ll need help buying. The CHFA created the SectionEight Homeownership loan for just that purpose.
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Colorado. Half your DPA loan is forgiven over the first five years of your mortgage. But the other half remains repayable for the full 30 years and is only forgiven when you make your last payment on your mortgage.
Just remember that you’ll need to meet CHFA and HUD income, credit score, and profile requirements to qualify for these lowered taxes and increased savings. You must be a trustworthy borrower making median or below-median income. In addition, you cannot have owned or co-owned a home in the last three years.
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As you compare different loan programs and assistance options, keep an eye on the latest Colorado mortgage rates. Be sure to compare loan options from a variety of mortgage lenders, and if you see an attractive rate, lock it. If you’re ready to buy your first home and are interested in a Colorado Housing and Finance Authority program, register for an online homebuyer education course. Once you have your certificate of completion, browse different lenders through the agency’s website. In addition to meeting CHFA general loan requirements, the home you’re buying and your income must be within the program’s purchase price and income limits, respectively.
