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Today’s Rates for First Time Homebuyers in Colorado
Tuesday, December 6, 2016
Mortgage rates are at 4.36% for the 30 year fixed loan program and at 3.50% for the 15 year fixed. As for variable rates, the 5/1 ARM rate currently stands at 3.50%. Check out FHA and VA rates as well if you are doing low or no down payments.
Colorado First Time Home Buyer Checklist
Decide on your loan program options. If you're moving to an eligible area, you may qualify for a zero down payment loan through USDA. Veterans may be eligible for VA loans, which do not require cash down. The content in the paragraphs below should give you an idea of where you may fall.
Get to know your credit score. Your credit should fall somewhere above 600, but few lenders accept scores in the high 500s. If your credit score needs a boost, work on improving it before you try to take out a mortgage. Once annually, you're able to request a free credit report from the three major credit bureaus.
Survey interest rates from a few lenders in your part of Colorado. Choose one who not only provides a great offer, but carries a high rating from the Better Business Bureau.
Get pre-approved or pre-qualified. Once you've picked a lender, provide income documentation with your last two pay stubs and tax returns from the past two years.
Plan your budget. You could be pre-approved or pre-qualified for a loan amount that is bigger than you had anticipated, but do not base affordability on the sum provided. Remember - pre-approvals are not guaranteed, and only you know what you can truly afford.
Go home shopping. Be sure to avoid making extravagant purchases, taking out new installment loans, or anything else that could weaken your financial standing. Lenders will check your accounts again before closing your loan.
Low Down Payment Loans Through FHA
If you’re a first time home buyer without a lot to put down, a Colorado FHA loan may accommodate you. FHA loans are backed by the government and designed to help home buyers with limited upfront funds receive financing.
Down payment: 3.5%
Minimum acceptable credit score: 580 (varies)
Mortgage insurance: Upfront (1.75% loan amount) and monthly
Property guidelines apply and are verified via home inspection
You can find additional information about FHA loans on the Colorado page of the FHA website.
No Down Payment Loans Through USDA
The United States Department of Agriculture backs home loans for zero down to Colorado home buyers looking to move to or live in rural areas. Find out if your buying city is eligible by searching the USDA's property map. Note that popular areas like Aspen, Boulder, Denver, and Aurora are not eligible.
Down payment: None required; financing up to 102% available depending on home appraisal
Minimum acceptable credit score: 620
Mortgage insurance: Upfront (2% loan amount) and monthly
Income maximums apply
Colorado Grant and Assistance Programs
The Colorado Housing and Finance Authority (CHFA) offers several loan programs to help first time home buyers of various backgrounds affordably finance a mortgage:
CHFA Advantage: no monthly mortgage insurance and only 3% down required; 680 credit score minimum.
CHFA Preferred: low mortgage insurance rates and down payment assistance available to cover the 3% down payment; 620 credit minimum.
CHFA SmartStep: low interest rate mortgage with available down payment assistance to borrow; 620 credit minimum.
HomeOpener: program for higher cost properties than other programs permit; down payment assistance is available.
HomeAccess: home financing help for borrowers who have diabilities; borrowers with children with diabilities are also eligible.
SectionEight Homeownership: purchase and payment assistance to borrowers with Section 8 rental vouchers for the year preceding mortgage application filing.
Also available is the Mortgage Credit Certificate (MCC) tax credit program for first time home buyers with a credit score of 620 or above. The MCC is not a loan but a tax benefit that lessens the federal withholding on participant pay checks, freeing more cash for monthly mortgage payments. The MCC tax credit program is available statewide, including popular cities like Boulder, Denver, and Aurora.
Major Cities in Colorado
Looking for programs specific to your part of Colorado? Lender411 has researched mortgage assistance programs for the top city in Colorado for first time homebuyers: