Colorado First-time Homebuyer Assistance Programs

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We are all hearing the stories about large rent increases mid-way through 2021, and Colorado is a prime example.  I currently have buyers facing a rent increase, from $2000 to $2700.  A contractor just told me about his son living in one half of a  converted 2 car garage in Santa Barbara, for $1600 per month.  It is no wonder that buyers are escaping, and trying to buy.  Combined with a shortage of listings due to covid fears and bargain basement interest rates, this has all come together for the big storm we call, 'the Stupid Silly Real Estate Market of 2021'.

And as a real estate agent, it is my job to educate first time homebuyers on how to finance this big move-or at least send buyers in the right direction.  Bankrate publishes a number of good online articles, and this one concerning first-time homebuyer assistance programs is one worth repeating.

A first-time homebuyer loan allows a buyer with a low or mid-range income and limited savings to finance a home purchase. Typically, these types of loans come with a below-market rate, and sometimes lower mortgage insurance premiums. You can often pair them with down payment and closing cost assistance, so they’re ideal if you don’t have the means to put a substantial amount of money down on a home.

Many first-time homebuyer loan programs only require that you haven’t owned a home in the last three years, not that you’re a true first-time buyer. Often, all it takes to qualify is an acceptable credit score and income level (determined by program), the completion of a homebuyer class and a contribution of some of your own funds to the purchase.

Many mortgage lenders offer first-time homebuyer loans, sometimes through partnerships with a state housing finance agency, or HFA. Clicking on the previous link provides first-time homebuyer loan programs by state.

And here is the Colorado description from the Bankrate website...

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2021 Colorado First-time Homebuyer Assistance Programs

Written by Ellen Chang
April 13, 2021/
3 min read
Edited By Suzanne De Vita

Colorado is a popular place to move to, with an abundance of outdoor recreational opportunities and wide-open spaces. Buying a home in the state can be challenging and competitive, however, especially for first-time homebuyers. If you’re looking for your first home, Colorado’s state housing finance agency, the Colorado Housing and Finance Authority, offers several mortgage and assistance programs that can help make homeownership more affordable for you.

Colorado first-time homebuyer loan programs
The Colorado Housing and Finance Authority (CHFA) provides access to fixed-rate mortgages and financial help for both your down payment and closing costs. In general, you could be eligible for a CHFA program if you:

Have a credit score of at least 620
Complete a homebuyer education class
Meet income requirements (based on the loan program, the size of your household and the location of the home)
Can contribute at least $1,000 to the purchase
Fulfill your mortgage lender’s loan requirements
CHFA has a number of programs for homebuyers, including:

CHFA FirstStep – CHFA’s FirstStep and FirstStep Plus programs provide a 30-year fixed-rate FHA loan to first-time homebuyers, veterans or any buyer purchasing in a targeted area, along with down payment assistance if needed. 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.
CHFA HomeAccess – CHFA’s HomeAccess and HomeAccess Plus programs can provide a 30-year fixed-rate FHA or USDA loan to a first-time homebuyer or veteran who is either living with a permanent disability or is the custodial parent of a child living with a permanent disability. Like other CHFA programs, there are income and purchase price limits, but if you’re eligible, you can also obtain up to $25,000 in down payment assistance with your loan.
CHFA SectionEight – CHFA’s SectionEight and SectionEight Plus Homeownership programs can provide a 30-year fixed-rate FHA or USDA loan to a first-time homebuyer or veteran who’s also receiving Section 8 assistance from a Section 8 agency. You can combine this program with CHFA down payment assistance, but there’s a borrower income limit: $126,200.
CHFA SmartStep – CHFA’s SmartStep and SmartStep Plus programs provide 30-year fixed-rate FHA, VA or USDA loans and CHFA down payment assistance. Like the SectionEight program, the income limit is $126,200.
HFA Advantage and Preferred loans – CHFA also offers Fannie Mae HFA Preferred and Freddie Mac HFA Advantage loans for up to 97 percent financing, including an Advantage loan for low-income borrowers (called the Very-Low Income Program, or VLIP). These loans can also be paired with CHFA down payment assistance.
Colorado down payment assistance
CHFA offers two types of down payment assistance: a grant and a second mortgage. With the CHFA down payment assistance grant, you can receive funds for up to 3 percent of your first mortgage (for example, $6,000 on a $200,000 mortgage). The grant doesn’t have to be repaid. It can only be combined with a SectionEight or SmartStep first mortgage, however.

CHFA’s second mortgage provides assistance funds for up to 4 percent of your first mortgage ($8,000 on a $200,000 mortgage). You don’t have to repay this assistance until you pay off or refinance the first mortgage or sell your home. This option can be paired with a FirstStep, HomeAccess, Preferred, SectionEight or SmartStep first mortgage.

Note that you can only use one of these options, not both, in conjunction with your first mortgage.

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Other first-time homebuyer loan programs
Beyond CHFA’s programs, there are many loan options that can fit your needs as a first-time homebuyer. As you shop around for a mortgage, consider looking into low- or no-down payment loans, like FHA, VA or USDA mortgages, or a Fannie Mae or Freddie Mac 3-percent down conventional loan. Depending on your profession, you might also qualify for the Good Neighbor Next Door program, which has a very low down payment requirement on homes in certain areas. Explore Bankrate’s guide to first-time homebuyer loans and programs to learn more.

Get started
As you learn about the various loan programs and assistance you might qualify for, keep an eye on the latest Colorado mortgage rates. Be sure to compare loan options from a variety of mortgage lenders. If you’re ready to buy your first home and are interested in a Colorado Housing and Finance Authority program, you can connect with a participating lender through the agency’s website.

Written by
Ellen Chang
Contributing writer

Read more From Ellen
Ellen Chang is a freelance journalist who is based in Houston. For Bankrate, Chang focuses her articles on mortgages, homebuying and real estate. Her byline has appeared in national business publications, including CBS News, Yahoo Finance and MSN Money.

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Cover photo graphics courtesy of Gordon Johnson via Pixabay

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Coldwell Banker Residential Brokerage

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