Colorado First-Time Home Buyer Loan Programs

The good news for Colorado home buyers in 2025 is there are a variety of state, local, and federal programs offer down payment assistance (DPA), grants, low-interest home loans, and tax incentives to make homeownership more accessible.  The RefiGuide published this guide to uncover the best Colorado first-time home buyer programs, including statewide and local grant initiatives, provides reference links, and includes two case studies to illustrate their impact.

Colorado’s housing market, with a median home price of $555,500 in 2024, presents significant challenges for first-time home buyers, particularly in high-demand areas like Denver, Boulder, and Colorado Springs. The median down payment in Colorado was $70,000 for single-family homes in 2024, making upfront costs a barrier for many.

Statewide Colorado First-Time Home Buyer Programs

The Colorado Housing and Finance Authority (CHFA) is the primary provider of first-time home buyer programs in Colorado, offering 30-year fixed-rate mortgages (FHA, VA, USDA, or conventional) paired with DPA.

Eligibility typically requires a minimum credit score of 620 (though some programs accept non-traditional credit), a debt-to-income (DTI) ratio of 50–55%, completion of a CHFA-approved homebuyer education course, and a minimum borrower contribution of $1,000 (which can be gifted).

Income and purchase price limits vary by county and household size, with a maximum loan amount of $806,500.

1. CHFA FirstStep and FirstStep Plus

The FirstStep program provides 30-year fixed-rate FHA loans for first-time buyers, veterans, or those purchasing in targeted areas, offering the lowest interest rates among CHFA programs. FirstStep Plus adds DPA as a 0% interest second mortgage (up to $25,000 or 4% of the first mortgage), repayable upon sale, refinance, or when the home is no longer the primary residence. A grant option (up to 3% of the mortgage, capped at $25,000) is available for SmartStep or Section 8 borrowers. Requirements include:

• Income limits (e.g., $126,200 statewide for some programs).

• Purchase price limits by county.

• Homebuyer education course.

Details at CHFA FirstStep.

2. CHFA FirstGeneration and FirstGeneration Plus

Designed for first-generation home buyers (those whose parents or guardians never owned a home or who were in foster care), this program offers a 30-year fixed-rate mortgage with up to $25,000 in DPA as a 0% interest, deferred second mortgage. Borrowers must submit an affidavit verifying first-generation status. Requirements mirror FirstStep, including a 620 credit score and homebuyer education. Learn more at CHFA FirstGeneration.

3. CHFA Preferred and Preferred Plus

The Preferred program offers 30-year fixed-rate conventional loans with reduced private mortgage insurance (PMI) premiums, ideal for buyers with stronger credit. Preferred Plus includes DPA as a 0% interest second mortgage (up to 4% or $25,000) or a 3% grant for eligible borrowers. The program has no purchase price limits but enforces income caps. Visit CHFA Preferred.

4. CHFA SmartStep and SmartStep Plus

SmartStep provides 30-year fixed-rate FHA, VA, or USDA loans for buyers with fair or non-traditional credit, with no minimum down payment for VA/USDA loans. SmartStep Plus offers DPA up to $25,000 or 4% as a 0% interest second mortgage or a 3% grant. This program suits buyers with higher DTI ratios (up to 55% for credit scores of 660+). See CHFA SmartStep.

5. CHFA HomeAccess

For buyers with disabilities or those caring for a disabled family member, HomeAccess offers a 30-year fixed-rate mortgage with a second mortgage up to $25,000 for DPA and closing costs, repayable under standard CHFA terms. Details at CHFA HomeAccess.

6. CHFA SectionEight and SectionEight Plus

This program targets first-time buyers or veterans receiving Section 8 assistance, offering 30-year fixed-rate FHA or USDA loans with up to $25,000 in DPA (4% second mortgage or 3% grant). Requirements include Section 8 eligibility and a 620 credit score. Visit CHFA SectionEight.

7. CHFA Down Payment Assistance Grant

CHFA’s grant provides up to 3% of the first mortgage (capped at $25,000) for down payment or closing costs, requiring no repayment. It’s available with FirstStep, SmartStep, or SectionEight loans but is limited to specific borrowers. Learn more at CHFA Down Payment Assistance.

8. Colorado Housing Assistance Corporation (CHAC) Down Payment Assistance

CHAC, a nonprofit, offers second mortgage loans up to $8,000 for low- to moderate-income buyers (80% AMI or less) to cover down payment, closing costs, or principal reduction. The loan requires monthly repayments, a 620 credit score (varies by first mortgage), and a homebuyer education course. The home’s purchase price must not exceed 95% of the local median. Details at CHAC Down Payment Assistance.

9. Colorado First-Time and Second Chance Home Buyer Savings Account (FHSA)

This program allows Coloradans to save up to $50,000 in a designated account, with earnings (interest or capital gains) exempt from state taxes if used for closing costs or down payments. Accounts can be savings, mutual funds, or brokerage accounts, and funds can support another first-time buyer (e.g., a child). File a form with state taxes to designate the account. More information at Colorado Department of Revenue.

Local First-Time Home Buyer Incentives

1. City of Aurora Home Ownership Assistance Program

Aurora provides up to $10,000 in DPA as a 0% interest, deferred loan for first-time buyers with low to moderate incomes. The home must be within city limits and serve as the primary residence. Contact Aurora Housing or call 303-739-7000.

2. Boulder County Down Payment Assistance Program

For homes outside Boulder city limits, this program offers up to 10% of the purchase price (max $40,000) as a shared appreciation loan, repayable after 15 years with a percentage of the home’s appreciation. Eligibility requires first-time buyer status and income limits. See Boulder County Housing.

3. Denver Metro Mortgage Assistance Plus Program

Denver offers grants up to 4% of the mortgage amount for low- to moderate-income buyers in the metro area. The program targets first-time buyers and requires a homebuyer education course. Visit Denver Office of Economic Development.

4. Commerce City Down Payment and Closing Cost Assistance

Commerce City provides up to $15,000 in DPA for first-time buyers, with income and residency requirements. The assistance is a deferred loan. Learn more at Commerce City Housing.

5. El Paso County Turnkey Mortgage Origination Program

This program offers a 30-year fixed-rate mortgage with a 4% DPA grant (no repayment required) for low- to moderate-income buyers in El Paso County. Contact El Paso County Economic Development.

6. Fort Collins Homebuyer Assistance

Fort Collins partners with CHFA and other programs but no longer offers direct loans. Existing loan holders can contact Tamra Leavenworth at Fort Collins Housing or 970-416-4366.

7. NeighborhoodLIFT Program (Denver-Aurora)

This program provides up to $15,000 in DPA as a forgivable second mortgage (20% forgiven annually over five years) for first-time and repeat buyers in the Denver-Aurora area. See CRHDC NeighborhoodLIFT.

8. HomesFund Down Payment Assistance

Serving southwest Colorado, HomesFund offers shared appreciation loans, building wealth loans (for buyers without 20% down), and mortgages for mobile homes or park units. Assistance includes DPA and homebuyer education. Visit HomesFund.

9. City of Boulder Shared Appreciation Loan

Boulder’s program provides a shared appreciation loan to support first-time buyers, repayable after 15 years with a share of the home’s value increase. Income and residency requirements apply. Details at City of Boulder Housing.

Top 5 Colorado Lenders for Down Payment Assistance

Colorado’s high home prices make down payment assistance and home buying grants critical for first-time buyers. Here are five top Colorado mortgage lenders offering DPA through programs like CHFA and local initiatives, based on their expertise and program availability.

1. Security First Financial: A leading CHFA-approved lender, it offers up to $25,000 in DPA grants or second mortgages with CHFA’s FirstStep and SmartStep programs.

2. Home Trust Home Loans: Combines low-rate FHA loans with CHAC’s $8,000 DPA or Aurora’s $10,000 program, avoiding CHFA’s higher fees.

3. On Q Home Loans: Offers CHFA’s SmartStep Plus with up to $25,000 in forgivable or deferred DPA for FHA, VA, or USDA loans.

4. American Financing: A CHFA partner offering competitive rates and DPA up to $25,000, including forgivable loans for low-income buyers.
5. New American Funding: Specializes in CHFA and local DPA, providing up to $6,000 through its Pathway to Homeownership, combinable with CHFA grants.

These lenders streamline access to Colorado’s home buyer grants and DPA programs, requiring a 620 credit score and homebuyer education. Contact them to explore eligibility and maximize assistance.

Case Study 1: The Rodriguez Family in Aurora

The Rodriguez family, a couple with two children earning $80,000 annually, aimed to buy a $350,000 home in Aurora. As first-time buyers, they qualified for the CHFA FirstStep Plus program, securing a 30-year FHA loan with a 3.5% down payment ($12,250). They received a $10,500 DPA second mortgage (3% of the first mortgage) at 0% interest, covering most of their down payment, and a $10,000 grant from the City of Aurora Home Ownership Assistance Program. After completing a CHFA homebuyer education course, they contributed $1,000 from savings. The FHSA allowed them to save $5,000 tax-free for closing costs. Closed in 2024, they’ve built equity and enjoy stable payments, with the second mortgage deferred until sale.

Case Study 2: Jamal Carter in Denver

Jamal, a single first-generation buyer earning $60,000, wanted a $300,000 condo in Denver. With $10,000 in savings, he applied for the CHFA FirstGeneration Plus program, receiving a 30-year FHA loan and a $12,000 DPA second mortgage (4% of the first mortgage) at 0% interest. The NeighborhoodLIFT program added a $15,000 forgivable loan, forgiven over five years. He also used the New American Funding Pathway for $6,000, covering his 3.5% down payment ($10,500) and closing costs. After completing an online CHFA education course, Jamal closed in early 2025. The forgivable and deferred loans minimized his upfront costs, allowing him to focus on homeownership.

Federal Loan Programs Available in Colorado

FHA Home Loans – FHA loans require a 3.5% down payment with a 580 credit score, ideal for house buyers with limited savings or credit. These government loans are available through Colorado lenders like Bank of America, LoanDepot and Wells Fargo.

VA and USDA Loans – VA home loans are for veterans and active military borrowers buying a home in Colorado. USDA loans are for Colorado home buyers in rural areas require no down payment. VA loans have no PMI, while USDA loans have income and location restrictions.

Advice for Colorado First-Time Home Buyers

1. Get Pre-Approved: Obtain a pre-approval letter from a CHFA-approved lender to clarify your budget and strengthen offers.

2. Combine Programs: Pair CHFA grants with local DPA or NHF assistance to maximize funding. Confirm compatibility with your lender.

3. Complete Education Courses: CHFA requires courses like eHomeAmerica or Framework ($75, available in Spanish). Find options at CHFA Homebuyer Education.

4. Check Targeted Areas: First-time buyer requirements may be waived in CHFA-designated areas. See CHFA Targeted Areas.

5. Monitor Credit and DTI: Aim for a 620+ credit score and DTI below 50–55%. Use free credit tools at LendingTree Spring.

Colorado’s high home prices and 67-day median market time (January 2025) reflect competitive conditions, particularly in urban areas. DPA programs often require repayment upon sale or refinance, and grants are limited to specific loan types. Income caps (e.g., 80% AMI for CHAC) and purchase price limits may exclude buyers in high-cost counties like Boulder. Rural USDA loans are restricted to eligible areas, and VA loans require military service. Funding for local programs, like NeighborhoodLIFT, can deplete quickly, so monitor availability.

Colorado’s first-time home buyer programs, led by CHFA and supported by local initiatives in Aurora, Boulder, Denver, and beyond, provide critical financial tools to overcome high upfront costs. Grants, deferred loans, and tax-free savings accounts, combined with federal options like FHA, VA, or USDA loans, make homeownership achievable for low- to moderate-income buyers. By leveraging these resources, completing required education, and working with approved lenders, first-time buyers can navigate Colorado’s market and secure their dream home.

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