2025 Colorado First-Time Homebuyer Programs and Loans

First-time homebuyers in Colorado have access to several financial assistance programs. These initiatives provide low-interest mortgages, as well as grants and loans to help cover down payments, closing costs and other related expenses.

Learn more about Colorado’s first-time homebuyer programs, including eligibility criteria and how to apply.

First-time homebuyer programs in Colorado

Some first-time homebuyer programs in Colorado are managed by the Colorado Housing and Finance Authority (CHFA), while others are local initiatives overseen by county and city organizations. Here are five programs and the types of homebuyers they are best suited for:

• CHFA Preferred and CHFA Preferred Plus: Good option for conventional loan borrowers.
• CHFA SmartStep and CHFA SmartStep Plus: Good option for borrowers looking for no-down-payment loans.
• CHFA FirstStep and CHFA FirstStep Plus: Good option for low- and moderate-income first-time borrowers.
• CHFA Down Payment Assistance Grant: Good option for borrowers with limited savings for down payment and closing costs.
• CHFA Second Mortgage Loan: Good option for borrowers with limited down payment savings who meet income criteria.

CHFA Preferred and CHFA Preferred Plus

The CHFA Preferred programs offer 30-year fixed-rate conventional (non-government) loans to eligible borrowers — with the option of applying for down payment assistance. These programs, including the CHFA Preferred Very Low Income Program (VLIP), are subject to income limits but not purchase price restrictions. However, the maximum loan amount for all CHFA programs is $806,500.

With a low minimum down payment requirement, high debt-to-income ratio limits and reduced private mortgage insurance (PMI) premiums for some borrowers, the CHFA Preferred programs could be a good fit for buyers who might not meet qualifications for typical conventional loans.

Requirements

• Credit score of 620 or higher
• Minimum down payment of 3%
• Household income must not exceed $162,960
• $1,000 minimum borrower contribution (can be gifted funds)
• Completion of a CHFA-approved homebuyer education class before closing
• Property must be owner-occupied
• Available only on single-unit properties

Pros and cons

CHFA SmartStep and CHFA SmartStep Plus

The CHFA SmartStep programs offer 30-year fixed-rate Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loans to eligible borrowers — with the option of applying for down payment and closing cost assistance. These programs are subject to income limits but not purchase price restrictions. However, the maximum loan amount for all CHFA programs is $806,500, and buyers may be further restricted depending on the mortgage type. Borrowers must meet additional FHA, VA or USDA qualification requirements. The SmartStep programs are also open to borrowers with no credit scores.

With no minimum down payment requirement for some loan types and high debt-to-income ratio limits, the CHFA SmartStep programs could be a good fit for buyers with non-traditional or fair credit and those looking for no-down-payment loans.

Requirements

• Credit score of 620 or higher (for borrowers who have credit scores)
• Minimum down payment of 0% or 3.5%, depending on loan type
• Household income must not exceed $162,960
• $1,000 minimum borrower contribution (can be gifted funds)
• Completion of a CHFA-approved homebuyer education class before closing
• Property must be owner-occupied
• Available for single-unit properties only

Pros and cons

CHFA FirstStep and CHFA FirstStep Plus

The CHFA FirstStep program provides 30-year FHA loans to first-time homebuyers and other eligible borrowers with the option to apply for down payment assistance. These programs offer the lowest interest rates among CHFA’s offerings and are subject to income and purchase price restrictions.

With a low minimum down payment and high debt-to-income (DTI) ratio limits, the CHFA FirstStep programs could be a good fit for low- and moderate-income borrowers with fair or poor credit.

Requirements

• Must be a first-time homebuyer, qualified veteran or buying a home in a targeted area
• Credit score of 620 or higher
• Minimum down payment of 3.5%
• Household income must not exceed program limits based on family size and county
• Purchase price must not exceed program limits
• $1,000 minimum borrower contribution (can be gifted funds)
• Completion of a CHFA-approved homebuyer education class before closing
• Property must be owner-occupied
• Available for single-unit properties only

Pros and cons

CHFA Down Payment Assistance Grant

The CHFA Down Payment Assistance Grant provides up to $25,000 or 3% of your first mortgage, whichever is lower, toward your down payment, closing costs and other eligible purchase expenses. To be eligible for the grant, you must commit to a 30-year fixed-rate CHFA loan. The grant funds do not need to be repaid.

Requirements

• Credit score of 620 or higher
• Household income must not exceed $162,960
• Completion of a CHFA-approved homebuyer education class before closing
• $1,000 minimum borrower contribution (can be gifted funds)

Pros and cons

CHFA Second Mortgage Loan

CHFA also offers down payment assistance as a deferred second mortgage for up to 4% of your first mortgage amount or $25,000, whichever is lower. There are no interest or monthly payments, but the loan must be repaid once you pay off the first mortgage, refinance your home or move out of the home. Like the CHFA grant, the second mortgage funds can be used for a down payment, closing costs and other eligible expenses.

Requirements

• Credit score of 620 or higher
• Household income cannot exceed first mortgage limits
• Completion of a CHFA-approved homebuyer education class before closing
• $1,000 minimum borrower contribution (can be gifted funds)

Pros and cons

Additional Colorado first-time homebuyer programs

Colorado first-time homebuyer qualifications

Colorado offers many types of first-time homebuyer programs in addition to the options listed above. While eligibility criteria may vary, the approval process is generally the same regardless of where you apply. Here’s a step-by-step breakdown of what you need to do to apply and qualify for a first-time homebuyer program in Colorado.

Steps to apply for a first-time homebuyer program

1. Choose the right program for you.

Review the different types of home purchase and down payment assistance programs offered and determine whether you meet their criteria. You can explore your options on the U.S. Department of Housing and Urban Development’s (HUD’s) homeownership support page and the Colorado Division of Housing’s homeowner assistance page.

2. Choose a participating lender.

Once you’ve identified the program that suits you best, reach out for a list of approved mortgage lenders. Keep in mind that not every lender participates in every program. While participating lenders can help assess your eligibility, you should shop around for mortgage lenders and interview several companies before making your final decision. Once you choose a lender, they can walk you through applying for a mortgage preapproval.

3. Attend homebuyer education.

You may be required to attend a homebuyer education class if you participate in one of Colorado’s first-time homebuyer assistance programs. For example, all CHFA programs require new borrowers to attend an approved homebuyer education course. You may also have to meet program staff for a mandatory consultation before moving forward with your loan. At this stage, you can begin working with a real estate agent and start looking for homes.

4. Complete the loan approval process.

Once you’ve completed the steps above and found a home you’d like to purchase, you can expect a property inspection, home appraisal and loan underwriting next. This process is similar to getting a mortgage preapproval. Be prepared for an underwriter to review your finances (including your credit score) to ensure you can comfortably take on the commitment of a new home loan. While most mortgage lenders require a minimum credit score of 620, the average FICO score in Colorado was 731 in 2024, according to Experian.

5. Sign the paperwork and get the keys to your new home.

At this stage, if everything has gone smoothly in the steps above and your loan has been approved, you’ll sign the paperwork to close on the loan. Once you’ve signed on the dotted line, any loan funds approved, including down payment assistance, will be applied to the transaction. Congratulations — you’re a homeowner now!

Understanding Colorado first-time homebuyer down payment assistance

First-time buyers and, sometimes, even repeat homebuyers can qualify for help with the upfront costs of their purchase through down payment assistance (DPA) programs. Of the 82 DPA programs in Colorado, about 95% had available funding as of the fourth quarter of 2024, according to Down Payment Resource’s homeownership program index.

Here are the different types of financial assistance available to cover costs like your down payment or closing expenses.

Deferred second mortgage

Requires repayment? Yes

Getting a deferred second mortgage means you’re taking on another loan. However, unlike your first mortgage, you don’t need to make regular monthly payments on a deferred mortgage. These loans are often called “soft” or “silent” second mortgages and usually only need to be paid off when you sell your home or refinance your first mortgage.

Forgivable second mortgage

Requires repayment? No (Unless you fail to meet the program’s stipulations.)

A forgivable second mortgage adds another claim on your home, but it’s typically forgiven over time if you live there for a specified period. If you move, refinance, sell the home before that time ends, or fail to meet any other required terms, you’ll have to repay the remaining balance.

Grant

Requires repayment? No

Unlike loans, grants don’t need to be repaid. While this type of financial support is very popular for down payment assistance, it may be harder to access than other programs, especially in areas with limited funding.

Mortgage credit certificate

Requires repayment? No

Another avenue of assistance is using a mortgage credit certificate (MCC) to help you save on your tax bill by providing a dollar-for-dollar tax credit for a percentage of the mortgage interest you pay each year up to $2,000. However, the statewide MCC program in Colorado is no longer funded.

Keep these things in mind about DPA programs

Down payment home assistance programs often require borrowers’ incomes to be within certain limits. They may also require a minimum financial contribution toward the home’s purchase or that you remain in the house for a certain amount of time to avoid repayment. Make sure to check with your lender to find out whether you’re eligible for assistance before starting the application process.

How much of a down payment do I need to buy a house in Colorado?

The down payment you need to buy a house in Colorado varies, depending on your lender, loan type and the assistance program you choose. The traditional down payment is 20% of a home’s value, which would amount to about $100,220 based on the average purchase price for a U.S. home in the third quarter of 2024, which was $501,100.

However, with various loan options and DPA programs, the actual amount you need to put down may be as little as 3% to 5%, or in some cases, even 0%. According to LendingTree’s latest first-time homebuyers study, the average down payment paid by first-time buyers in Colorado in 2023 was $40,560.

Can I qualify for down payment assistance in Colorado?

You must meet general requirements to qualify for down payment assistance in Colorado. These include qualifying with an approved lender, meeting their income and credit score prerequisites, completing mandatory homebuyer education, and using the home as your primary residence. Depending on your chosen program, you may have to satisfy additional criteria.

How do I apply for Colorado first-time homebuyer down payment assistance?

To apply for Colorado first-time homebuyer down payment assistance, contact the programs available in your city, county or state. Ask for a list of participating lenders and connect with them to determine your eligibility for financial aid. You can also seek guidance from a housing counseling agency near you.

Other first-time homebuyer loan programs

Conventional loans

Conventional loans are offered by private lenders, such as banks or mortgage companies, rather than being backed by a government agency. To qualify, borrowers typically need a minimum credit score of 620, and first-time homebuyers may be able to make a down payment as low as 3%. Although conventional mortgage interest rates can be higher than government loan rates, the loans carry fewer fees and are often less expensive.

FHA loans

FHA loans are a good option for first-time homebuyers. They require down payments as low as 3.5% with a minimum credit score of 580. Buyers with credit scores between 500 and 579 can still qualify by making a down payment of 10% or higher.

Because FHA loans are insured by the Federal Housing Administration (FHA), lenders can offer more flexible terms and competitive interest rates. While FHA loan interest rates are typically lower than conventional mortgages, borrowers have to pay mortgage insurance, which can increase the overall cost of the loan.

VA loans

VA loans are insured by the Department of Veterans Affairs and are available to eligible veterans, active-duty service members and qualifying military spouses. Homebuyers can benefit from lower VA interest rates, a 0% down payment, and, in some cases, no minimum credit score requirement. Borrowers don’t pay ongoing mortgage insurance but are required to pay an upfront funding fee.

USDA loans

USDA loans, guaranteed by the U.S. Department of Agriculture, don’t require a down payment or minimum credit score. However, borrowers are limited to buying homes in designated rural areas and must fall within a certain income threshold.

What are the best first-time homebuyer loans?

Finding the best first-time homebuyer loan can feel overwhelming. To narrow down the best mortgage options, consider your financial situation, credit history and housing needs, and how they align with the eligibility criteria for these standard loan programs.

Home price trends in Colorado’s major areas

Home prices in Colorado have remained relatively stable, with markedly lower inflation than in the rest of the country. According to data from the Federal Housing Finance Agency (FHFA), the state ranked 48th for home price increases, at only 1.88% between 2023 and 2024, compared to 4.51% in the United States.

The Denver-Aurora-Lakewood metropolitan area — comprised of 10 Colorado counties, including the state’s capital city of Denver — ranked 88th in FHFA’s Top 100 metro areas. House prices in this metro rose 3.30% over the past year and 43.23% over the past five years.

Colorado Springs, the state’s second-most populous city, ranked 92nd in FHFA’s Top 100 metro areas, with house prices rising 3.23% over the past year and 49.58% in the past five years.

Is there a first-time homebuyer tax credit in Colorado?

While there’s no federal tax credit for first-time homebuyers in Colorado, you may be eligible for other homeownership tax breaks, such as deducting mortgage interest if you itemize deductions.

What are the current mortgage rate trends in Colorado?

Similar to national rates, the 30-year fixed-rate mortgage rates in Colorado entered 2025 near the 7% mark after fluctuating between 6% and 7% for most of 2024. The latest mortgage rate forecast from LendingTree predicts that interest rates will remain elevated, with a best-case scenario of rates edging closer to 6% by the end of 2025.