Though the Colorado real estate market remains hot, homeownership is still within reach for first-time home buyers. This is especially true if you’re able to qualify for a Colorado first-time home buyer program. 

Here’s what you need to know before you start shopping for a mortgage or a home.

National home buying assistance

The Federal Housing Administration (FHA) and the National Homebuyers Fund offer their own programs for home buyers. Yet, there are many other government assistance programs available locally in the county, city, and even zip code level.

An easy way to get started with national home buying assistance is to visit the U.S. Department of Housing and Urban Development (HUD) website. HUD provides a list of local home buying programs available in each state. While some government assistance programs only apply to first-time home buyers—defined as someone who has not owned a home within the last three years—others are not limited to this demographic

Colorado mortgage assistance

Specific to Colorado, the Colorado Housing and Finance Authority (CHFA) offers financial resources to strengthen homeownership. CHFA has already (as of 2019) helped 111,63 Coloradans become homeowners with help from their down payment and closing cost assistance programs.

To qualify, you must meet income levels for your household size (as stated in the CHFA guidelines) as well as meet credit score and debt-to-income (DTI) ratio guidelines. 

Qualified home buyers can get into a home for as little as $1,000 down, or they can receive closing cost assistance. Some may even be able to avoid mortgage insurance. 

Chenoa Fund

Planning to use an FHA loan? Great news! The Chenoa Fund works hand-in-hand with a fixed-rate FHA first mortgage on a single-family property, providing assistance up to 3.5% of the home’s purchase price. This effectively covers the FHA loan’s 3.5% down payment requirement, meaning you can essentially get into a new home for $0 down.

Chenoa is funded by CBC Mortgage Agency (CBCMA), a federally chartered government agency. CBCMA specializes in providing financing for loans under the guidelines of FHA and Fannie Mae and partners with quality mortgage lenders on a correspondent basis. To learn more, visit the Chenoa website.

Down payment grants

Grant programs offer help for buyers who are interested in purchasing a home but are not exclusive to just first-time home buyers. As long as you meet the program criteria, you will have no obligation to pay back granted funds.

Best of all, because mortgage grants are separate from home loans, some may be combined to offer a better incentive.

Gifted money

It’s not uncommon for home buyers, especially millennials and first-time home buyers, to use gift money toward a down payment. The amount you’re eligible to receive depends on your loan program. There’s a good chance you may have to come up with your own money to help cover the cost of down payment.

If you’d like to use gifted money toward your down payment, be sure to let your lender know so you can include a gift letter

The bottom line

If you think that you may be eligible for down payment assistance or first-time home buyer programs, there are some things you can do right now to set yourself up for success.

First, check your credit report and make sure your FICO score meets program and lender guidelines. Then find a lender who is familiar with first-time home buyer programs, bonus points if they are local to Colorado. Finally, save what you need and establish your plan, so you’re able to make homeownership a reality sooner than later. You’ll be glad you did!