Colorado Down Payment Assistance - CHFA

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First-time homebuyer and down payment assistance are independent of each other and have different benefits. The good news is you don’t have to be a first-time homebuyer to qualify for down payment assistance. There are many options to choose from, however, Colorado Housing and Finance Authority (CHFA) is a statewide program helping Coloradans with affordable homeownership. CHFA down payment assistance programs are offered through participating mortgage companies in Colorado such as Competitive Home Lending.

There are a few things to consider prior to inquiring about CHFA down payment assistance. First, understand the pros and cons of homeownership. Evaluate your credit status. Talk to our Colorado state licensed loan officer about lending guidelines if you are unsure about your credit history. An experienced loan officer can help you understand different loan programs without impacting your credit score. Be sure to get a good idea of closing costs, down payment, and monthly payment. It is possible to get a general idea in writing before you are obligated to run your credit report. If a mortgage company is unwilling to provide you with a written summary of loan details, it is best to check with a different company that will offer this information without a credit inquiry. 

Each mortgage loan program has different requirements for qualification that can vary from CHFA’s requirements. You want to be familiar with a few guidelines pertaining to the CHFA down payment assistance program to ensure you qualify. For example, all borrowers must have a qualifying credit score of 620 or greater. Income restrictions may apply and are county specific; talk to our state licensed loan officer to ensure your income complies. Homebuyers have a minimum contribution for the transaction. Of course, homebuyers must qualify for a mortgage loan from a participating mortgage lender. You can always schedule a free mortgage consultation with Competitive Home Lending if you have questions about qualifying for the CHFA down payment assistance program.

With a better understanding of the CHFA down payment assistance (DPA) requirements, it is now time to decide between the down payment assistance options. Homebuyers can choose between a down payment assistance grant or a second mortgage loan. DPA can be used to help with down payment and/or closing costs. Remember, a minimum financial contribution is still required. Talk to your local real estate agent about earnest money deposit and inspection fee to ensure you are prepared to purchase your home. 

The CHFA down payment assistance grant allows for up to 3% of the first mortgage loan amount and does not require repayment. The CHFA down payment assistance grant is based on a 30yr fixed rate loan for debt-to-income ratio purposes. CHFA’s alternate option is a second mortgage loan. This DPA option allows for up to 4% of the first mortgage loan amount to assist with down payment and closing costs. While the second mortgage loan has a repayment requirement, the payment can be deferred and can be paid in-full under certain conditions. Some examples of pay-off events are first loan payoff, the sale of the subject property, a home loan refinance, or the change of the subject property from primary residence status to a different status. Be sure to talk to a licensed Colorado loan officer if you have questions about these down payment assistance options. Once you have narrowed down your mortgage loan options and understand the funds needed to purchase a home you are ready to start the home shopping process.

It is time to select your mortgage company and loan officer.  CHFA has an exclusive list of participating mortgage lenders. Two of their top three lenders offer wholesale mortgage rates. You will get the most out of DPA when you avoid a retail mortgage lender and work with a wholesale mortgage company like Competitive Home Lending. Avoiding a retail mortgage lender will help to keep your mortgage payment lower and the cash needed for closing manageable. Have your real estate agent contact us about working together to get you the best home at the lowest cost. We are happy to share money saving tips that will help improve your homebuying power if they are not familiar with Competitive Home Lending’s wholesale mortgage loans. Get a free mortgage loan consultation today!