Real Help for Affording Your First Home

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If you’re feeling left out of Colorado’s hot housing market and are wondering if you’ll ever be able to afford to buy your first home, there IS help!

You have likely heard the commercials for zero down mortgages or only needing $1,000 to get into a house. While that can be the case, it’s not always as clear cut as it sounds. Here’s an overview.

The Colorado Housing and Finance Authority (CHFA) is probably the most well known downpayment assistance program in the state. CHFA now has two options to help with your downpayment:

  • A 4% grant — This does not require repayment.
  • A 5% loan — This is technically a “second mortgage”. It is a loan for up to 5% of the mortgage on the house you want to buy. This amount can be used toward your downpayment and closing costs. There is 0% interest and $0 in payments. It must be paid back in full when you sell or refinance the home.

Buyers who receive downpayment assistance from CHFA (either as the grant or the loan listed above) may also be eligible for a CHFA purchase loan. CHFA has several purchase loans available, accommodating credit scores as low as 620. There’s even a loan program to help individuals with a permanent disability — or parent(s) of a child or children with a permanent disability — become first time homebuyers. For buyers with a credit score of at least 680, CHFA also has a 3% down conventional option where you don’t have to pay mortgage insurance. That’s a savings of about $200 per month.

These programs do have limitations based on your income and how many people are in your family. They also take into account your financial profile and things like your credit score and the amount you are borrowing. You do need $1,000 of your own money into the deal, but you will also need to factor in things like money for inspection (up to $600) and appraisal (another $600 or so).

CHFA also offers another really cool program called the Mortgage Credit Certificate (MCC). You can pair the CHFA MCC with your CHFA first mortgage loan or any loan from a CHFA MCC-approved lender. It allows you to reduce the amount of federal taxes you owe by claiming 20 percent of your annual mortgage interest as a tax credit on your tax return. You then claim the remaining interest as a home mortgage interest deduction. The result: You pay lower taxes and have more money to put back into your home or into savings! The program is available statewide, with both income and purchase price qualifications.

Watch for another post I’ll be doing near the beginning of August about a $15,000 grant that Wells Fargo will be offering for first time buyers in several metro area counties.

I know I can get overly excited about things like this because I’m in the real estate business. But because I see the positive change that comes with owning a home, I can’t be blamed for believing that everyone should own a home! Every month, I help people reach this very achievable goal and I love it!

Even if you have concerns about your credit, most of the lenders I work with will help with getting you information on improving credit scores, etc. Reach out to me any time with questions.

As always, we are grateful for your trust in us and for your referrals. If you — or people you know — are looking to buy or sell a home, I would love to help! Contact me here.

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