Understanding Colorado's Down Payment Assistance Programs for First-Time Homebuyers
- dbarta5
- Feb 19
- 4 min read
Buying a home is a major milestone, but the upfront costs, especially the down payment and closing fees, can be a significant barrier. In Colorado, several programs exist to help ease this burden, making homeownership more accessible. One of the key resources is the Colorado Housing Finance Authority (CHFA), which offers various down payment assistance options tailored to different needs. This blog post explores these programs in detail, helping you understand how they work and which might be the best fit for you.
What Is CHFA and How Does It Help Homebuyers?
The Colorado Housing Finance Authority (CHFA) is a state agency that supports homebuyers by providing down payment assistance and closing cost help. CHFA offers loans and grants to eligible borrowers, which can reduce the amount of money needed upfront when purchasing a home.
Unlike some programs that only serve first-time buyers, many CHFA options are open to all homebuyers, though some are specifically designed for first-time buyers or those who have never owned a home in their family before.
CHFA’s goal is to make homeownership more affordable and achievable by lowering the initial financial hurdles.
Silent Second Mortgage Program
One of the most popular CHFA programs is the Silent Second Mortgage Program. This program offers assistance up to 4% of your first mortgage amount, which can be a substantial help toward your down payment and closing costs.
Key Features:
No interest charged on the second mortgage.
No monthly payments required while you live in the home.
Typically requires only 1% down payment from the buyer.
Closing costs usually range from $3,500 to $4,000, but sellers may cover these costs in some cases.
Repayment is deferred until you sell, refinance, or pay off your first mortgage, or if the home is no longer your primary residence.
A minimum down payment of $1,000 is required from the buyer.
This program allows buyers to enter the market with a minimal upfront investment, making it a favorite among Colorado homebuyers.
First Generation Program
The First Generation Program is designed for buyers who are the first in their family to purchase a home. It shares many features with the Silent Second Mortgage but offers a larger amount of assistance.
What Makes It Different:
Provides up to $25,000 toward your down payment, regardless of the home’s purchase price.
Ideal for buyers who have never had a family member own a home.
Helps overcome the unique challenges faced by first-generation homebuyers.
This program can be a game-changer for families breaking the cycle of renting and stepping into homeownership for the first time.
Grant Program
CHFA also offers a Grant Program that provides assistance up to 3% of your first mortgage amount. Unlike loans, grants do not require repayment, which can be a significant advantage.
Important Details:
No repayment required.
Usually requires a 2% down payment from the buyer.
Closing costs are typically around $4,000.
Borrowers may face a higher interest rate and monthly mortgage payment compared to other programs.
This option suits buyers who want to avoid additional debt but are comfortable with slightly higher monthly payments.
What Is Metro DPA?
The Metro Down Payment Assistance (DPA) program is another valuable option, especially for buyers in the Denver metropolitan area.
Features of Metro DPA:
Provides up to 4% assistance based on your first mortgage amount.
Allows non-occupying cosigners, which can help buyers who need additional support.
Has higher income limits compared to other CHFA programs.
No monthly payments or interest on the assistance.
Typically requires between 0% and 2% down payment plus around $4,000 in closing costs.
This program offers flexibility and support for buyers who may not qualify for other assistance programs due to income or family circumstances.
Important Next Steps for Borrowers
To qualify for any CHFA down payment assistance program, borrowers must complete a CHFA-sponsored homebuyer education course. This course prepares buyers for the responsibilities of homeownership and helps them understand the financial commitments involved.
Why Homebuyer Education Matters:
Learn how to budget for homeownership.
Understand mortgage terms and processes.
Gain tips on maintaining your home and protecting your investment.
Completing this education is a crucial step that ensures buyers are ready for the long-term commitment of owning a home.
Summary and What to Do Next
Colorado offers several strong down payment assistance programs through CHFA, each designed to meet different needs. Whether you are a first-time buyer, a first-generation homeowner, or someone looking for flexible assistance options, there is likely a program that fits your situation.
Key takeaways:
The Silent Second Mortgage Program is the most popular and offers no-interest, no-payment assistance.
The First Generation Program provides a significant $25,000 down payment boost for first-generation buyers.
Grants offer non-repayable assistance but may come with higher monthly payments.
Metro DPA supports buyers with non-occupying cosigners and higher income limits.
All programs require homebuyer education to prepare you for success.
If you are considering buying a home in Colorado, start by exploring CHFA’s programs and signing up for a homebuyer education course. These steps will put you on the path to owning your first home with confidence and financial support.
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