A Brief Look at the 2019 Home Buyer Programs
If you are currently renting and thinking of buying a home but are feeling like the opportunity is out of reach— you are one of many. However, there are several programs and different incentives for a Colorado first-time homebuyer. In addition, some down payment grants and first-time homebuyer programs are applicable to those that have previously or currently own a home.
You may be thinking that you need excellent credit and a sizeable down payment— however, these are two of the most common myths surrounding buying a home. Why? Because people don’t know about these programs, resulting in never even considering the homes they see for sale. This is why it is essential to talk with a trusted and local mortgage loan originator.
First, the Colorado Housing and Finance Authority (CHFA) Programs are for first-time home buyers, qualified veterans, and previous homeowners. Traditionally the terms are a 30-year, fixed-rate mortgage that can be paired with a down payment grant or a zero-interest second mortgage that can assist with closing costs, down payments and more. This type of program is statewide, a minimum credit score of 620 and a minimum down payment of approximately $1,000 is necessary. There are a variety of programs the CHFA offers but to be eligible to receive financing, and prospective home buyers must have a credit history and enroll in a home buyer education course.
Second, the FHA Metro Mortgage Assistance Plus Program is for first-time home buyers and low-moderate income families. This program offers down payment assistance and the possibility of being eligible for a grant that will cover a percentage of the 30-year, fixed-rate home loan. There are specific areas in Colorado where this program only qualifies, such as Denver, Thornton, Bennett, Boulder, and others. A minimum credit score of 640 is required as well as a low percentage down payment. It is suggested that if you are looking to take advantage of this, you should have a recommended debt-to-income ratio of 45% and only specific types of homes such as a single-family detached home, duplex, condo or townhome apply.
Third, is the Newsed Down Payment Assistance program for first-time homebuyers. Potential applicants may receive up to $8,000 for a down payment, closing costs, mortgage principal reduction, and interest buy down in the form of a second mortgage loan. However, you have to live in the Denver Metro area, complete a first-time homebuyer course, a property inspection must be conducted, and you can only purchase a home with a purchase price that doesn’t exceed 95% of the median local purchase price. While there are more restrictions for this program, if you live or want to live in the Denver Metro area, this may be useful to look into.
Fourth, is a VA Home Loan for first-time and non-first time homebuyers that are active duty military members or veterans. This type of loan is an excellent program if it applies to you because it provides 100% financing, which eliminates the need for a down payment. For the VA loan, it applies nationwide, and all veterans and active-duty military members can use this loan regardless if you have previously purchased a home or used this loan benefit before.
While more programs apply to those living in Colorado, some of these may put homeownership in reach for you. Don’t disqualify yourself from a program that you are interested in just because you are hesitant if you meet the requirements. It is essential to talk with a mortgage loan originator because it’s likely that there are more options available to you than you may know about.