What to know about buying a house in Colorado
Buying your first home is exciting — but it can be a little intimidating, too.
The good news is that first-time home buyers in Colorado have access to tons of support throughout the home buying process. That ranges from advice and home buyer education programs to cold hard cash in the form of down payment assistance. Explore your options to see what you qualify for.
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Colorado home buyer overview
According to the Colorado Association of REALTORS, the average home price in the state topped $700,000 in March 2022. That represented a 17.1% price gain year over year.
At $719,381, the Centennial State’s prices are nearly twice as high as the national average. So it’s just as well there’s plenty of support for a first-time home buyer in Colorado.
Colorado home buyer stats
|Average Home Sale Price in CO1||$719,381|
|Minimum Down Payment in CO (3%)||$21,581|
|20% Down Payment in CO||$143,876|
|Average Credit Score in CO2||728|
|Maximum CO Home Buyer Grant3||5% of loan amount in El Paso county only / 3% statewide|
Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.
First-time home buyer loan programs in Colorado
If you’re a first-time buyer in Colorado with a 20% down payment, you can get a conventional loan — likely with a low interest rate and no private mortgage insurance (PMI).
Putting 20% down will keep your monthly mortgage payments low. It might also give you an edge in competitive housing markets like Denver or Boulder.
However, few first-time borrowers have saved that much.
The good news is, there’s a wide range of mortgage loan options that can help buyers get into a new house with low or even no down payment:
- Conventional 97: Backed by Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. You’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so check your eligibility if you have a military service history
- USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment is required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
- CHAC and CFHA mortgage loans: Assisted mortgage programs offered statewide and locally. More info below
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) 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.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
Colorado first-time home buyer assistance programs
There are a variety of statewide and local programs to help first-time home buyers in Colorado make an affordable home purchase.
The Colorado Housing and Finance Authority (CHFA) operates statewide and provides education and down payment assistance.
The CHFA FirstStep and FirstStep Plus programs offer 30-year fixed-rate mortgages in the form of an FHA loan (home loans backed by the Federal Housing Administration).
You’ll normally need a credit score of 620, though you may find a CHFA-approved lender that will accept 580. You also have to have a low or moderate income for your area.
The Colorado Housing Assistance Corporation (CHAC) is another official statewide body providing all sorts of advice, education, and assistance to any first-time homebuyer in Colorado who asks.
In addition to down payment assistance, CHAC offers education courses and counseling.
Its courses come in two flavors: eHomeAmerica ($99 for the first borrower and $49 for each co-borrower) and Framework ($75). Both are currently available online and most elements have versions in Spanish.
To qualify for assistance from CHAC, you will need to have a household income that’s no higher than 80% of the area median income (AMI) where you want to buy. However, that can be 100% in Arvada.
You can call (303) 572-9445 or toll-free (866) 377-7835 to see if you’re eligible.
Besides CHAC, you may also be able to get assistance from the Community Resources and Housing Development Corporation (CRHDC) NeighborhoodLIFT program. This is available to buyers in Adams, Arapahoe, Denver, Douglas, and Jefferson Counties.
NeighborhoodLIFT offers home buyer education programs as well as preferential help for first responders, military service members, and teachers. Income caps are less restrictive for those who qualify.
Colorado first-time home buyer grants
Down payment assistance programs (DPAs) can provide grants and loans to help buyers cover their out-of-pocket expenses. That includes the down payment and closing costs.
These programs are often meant to help low-income home buyers, and many have income caps based on household size.
DPA programs and eligibility requirements vary by area, so check with your mortgage lender or real estate agent to see what’s available locally.
CHFA down payment assistance grants provide up to 3% of your mortgage amount as a grant, which is money that never has to be repaid.
So, for example, if you’re borrowing $400,000, you might receive up to $12,000 toward your down payment and/or upfront fees.
If that’s not enough, you can bump that up to 4% of your mortgage amount. But this is in the form of a second mortgage loan rather than a grant.
You’d have to repay that loan in full when you sell, refinance, or finally pay off your first mortgage. Other actions may also trigger repayment in full. Still, you don’t have to make any monthly payments in the meantime.
CHAC doesn’t seem to offer grants, only loans. And it doesn’t specify the maximum amount it will lend home buyers, nor the interest rate it charges. But its website does say:
“The loan is recorded as a second mortgage (lien) on the property being purchased. All of the loans require repayment, usually with monthly payments, although the start date of those payments may vary.”
It adds, “All borrowers are required to have a minimum contribution of $1,000 (minimum contribution for the disability program is $750.00) to the transaction that cannot be a gift. Exceptions may apply.”
The NeighborhoodLIFT program can provide $15,000 of down payment assistance on qualified properties. Remember, that’s only in Adams, Arapahoe, Denver, Douglas or Jefferson County.
You can download PDFs showing income limits and a map showing the areas covered. Eligible properties include a single-family detached home, townhouse, condominium, 1-4 unit property, or planned unit development (PUD).
CHFA, CHAC, and NeighborhoodLIFT all require applicants to take a home buyer education class. But most first-time home buyers in Colorado or elsewhere should welcome all the knowledge they can absorb.
Buying a home in Colorado’s major cities
Buying a home in or around one of Colorado’s major cities can be a little more challenging than buying in a suburb or rural area. So you’ll want to know what to expect.
Denver first-time home buyers
The median listing price in Denver was $550,000 in March 2022, according to Realtor.com. That was 12.5% higher than a year earlier.
If you want to buy a home at that price, your down payment might fall between:
- $16,500 for a 3% down payment
- $110,000 for a 20% down payment
Denver’s Department of Housing Stability (HOST) offers down payment assistance of up to $15,000. This seems to be part of the CHAC program, because interested parties are referred to it.
However, its website does provide Denver-specific household income caps: “The program is limited to households earning up to 80 percent of the area median income (up to $52,000 for a single-person household, or up to $66,850 for a three-person household).”
Note that availability and income caps may have been updated by the time you read this.
Colorado Springs first-time home buyers
The median listing price in Colorado Springs was $435,000 in March 2022, according to Realtor.com. That represented an increase of 14.5% year-over-year.
If you want to buy a $435,000 home, your down payment options might be:
- $13,050 for a 3% down payment
- $87,000 for a 20% down payment
Those buying in Colorado Springs may be in line for the El Paso County Turnkey Plus mortgage program. That offers “soft loans,” with a 0% interest rate and no monthly payments. And you can borrow 4% or 5% of your new mortgage’s value.
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.
Meanwhile, if you sell, refinance, or trigger other conditions, you’ll have to repay your loan balance in full at that time.
Aurora first-time home buyers
The median listing price in Aurora was $460,000 in March 2022, according to Realtor.com. That represented an increase of 18.3% year-over-year.
If you wish to buy a $460,000 home, your down payment options range between:
- $13,800 for a 3% down payment
- $92,000 for a 20% down payment
Aurora’s Home Ownership Assistance Program (HOAP) offers loans of up to $10,000 or the minimum down payment required for your mortgage, whichever is the less. And you must chip in at least 1% of the home’s purchase price from your own funds.
This is another “silent” loan, meaning you don’t make monthly payments or pay interest. However, none of it is forgivable. And you have to pay back the entire amount when you sell the home, when it is no longer your primary residence, or when you refinance with cash out.
Where to find home buying help in Colorado
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Colorado.
In addition to our selection, the US Department of Housing and Urban Development (HUD) provides a list of city- and county-specific programs across Colorado which you can see here.
Colorado first-time home buyer resources by county
Colorado first-time home buyer resources by city
Statewide Colorado first-time home buyer resources
What are today’s mortgage rates in Colorado?
When you’re ready to buy, make sure you get rate quotes from at least three to five mortgage lenders. This will ensure you’re getting the lowest interest rate and fees available to you.
1Source: Colorado Association of REALTORS Market Trends & Statistics Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state’s available DPA grants at the time this was written
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.