Are you ready to purchase your first home in Colorado, but what if you do not have several thousand dollars for a down payment or closing costs? Can you still purchase a home? Even with several options for down payments from 3%-5% down, people are struggling to come up with funds for a down payment. Luckily, there are several programs that provide assistance for down payments and other costs of purchasing a home and these programs are not as difficult to qualify for as many assume.

First of all, who qualifies for Down Payment Assistance?

Here are the basic requirements:

1. Credit score of 620 or above. Down payment assistance programs in Colorado require a credit score of 620 and up. Is your score not quite there? Don’t worry. Our expert team of lenders will work with, and they can help you make a plan to get your credit score up in as little as 2-6 months.
2. $1000 of personal money.  Any assistance program wants you to have a little “skin in the game” so you will need to save up at least $1000. With some programs that money can be a gift from someone else, but for other programs the funds must be your own.
3. Home Education Class. The programs require that you take a Home Education Class. The classes are provided in every county and are free if you attend in-person. Classes are available online for a fee of $100.
4. Income Limits. Each program will have income limits depending on what Colorado County you are purchasing in. Our expert team of lenders will give you all the specifics.
5. First-time Buyer or have not owned a home in at least three years. If you have owned a home within the last three years, you will have to wait until that time deadline has expired. In the meantime, use that time to save and plan for your home purchase.
6. Bankruptcy must be 2-4 years past.
7. Two-year work history. Does not have to be with the same company, but must be in the same industry. You are also required to be paid the same way (ie hourly)

MYTHS ABOUT DOWN PAYMENT ASSISTANCE

First time home buyers may have a few misconceptions about Down Payment Assistance.

• Myth #1: You need to be a first-time home buyer. No. You don’t have to be a first-time home buyer. This is great news with a qualifier: as long as it has been at least three years since you last owned a home, you can apply.
• Myth #2: The funds are strictly for a down payment. Actually, it can be used for anything involved with the purchase of your home such as closing costs. A more appropriate term would be “mortgage assistance”.
• Myth #3: DPA is free money.  In most cases the down payment assistance comes in the form of a silent second mortgage. This money is not required to be paid back until the first morgage is paid off or the property is sold. Our team of lenders will find the program that is most beneficial to you.

PROGRAMS Available IN COLORADO

CHAC – Colorado Housing Assistance Corp: “CHAC provides low-interest, flexible loans to low and moderate (80% AMI) income first-time home buyers for down payment and closing cost assistance throughout Colorado. The loan is recorded as a second mortgage, (lien), on the property being purchased. All of the loans require repayments, usually monthly, although the start date of those payments may vary. All borrowers are required to have a minimum contribution to the transaction, $1,000. 

COLORADO DPA –

• Grant funds up to 5% of your loan amount are available to Colorado residents to be applied toward down payment and closing costs of a Primary Residence
• Grants require no repayment
• No First Time Home Buyer requirement
• Income limits apply, but most applicants qualify – Conventional, FHA, VA and USDA Mortgages available

CHFA – Multiple options for down payment grants, assistance with closing costs, and mortgage loans.

EL PASO COUNTY TURNKEY – “The El Paso County, Colorado “Turnkey” Mortgage Origination Program provides a competitive 30-year fixed-rate mortgage with a down payment assistance (DPA) grant equal to 4% of the mortgage amount to qualifying low and moderate income homebuyer families throughout El Paso County, including the City of Colorado Springs.”

There are additional programs but the ones listed above are the most popular. Be encouraged that if you want to become a home owner but fall a little short of the basic requirements, there are ways to prepare that can get you ready in as little as 2-6 months. Work on getting your credit score up and save $1000. Our team of lenders will coach you through the entire process.

Smart Start Homeowners are experts with first time home buyers and down payment assistance programs. We are with you every step of the way. Find out more now.