House Hack Without a Downpayment

CHFA Down Payment Assistance: What You Need to Know

For many Coloradans, buying a home may seem out of reach due to the high costs associated with a down payment. Fortunately, the Colorado Housing and Finance Authority (CHFA) offers down payment assistance programs to help first-time homebuyers achieve their dream of homeownership. CHFA believes in responsible, affordable homeownership and through their statewide network of participating lenders, they offer a variety of home purchase loan programs, as well as grants and second mortgage loans for down payment and/or closing cost assistance.

CHFA Conventional Loans Income Limit Increase

Recently, CHFA conventional loans have increased their income limit to $148,120 annually in Colorado. This is a significant increase and opens the door for many more individuals to qualify for the best of both worlds - the low fees of a conventional loan and the benefit of CHFA down payment assistance. The income limit was previously about $60-80k in El Paso County. It's important to note that this product is restricted to first-time homebuyers, but other CHFA DPA programs are not restricted to FTHB’s. In case-by-case situations, Fannie/Freddie are looser in defining the parameters for first-time homebuyers than you might think. Typically, you are considered a first-time homebuyer if you haven’t had ownership in any property for three years or more.

General Program Requirements

To be eligible for CHFA down payment assistance programs, there are some general requirements that all borrowers must meet. All borrowers must have a mid-credit score of 620 or higher and total borrower income must not exceed CHFA’s income limits. Additionally, all borrowers must attend a CHFA-approved homebuyer education class (in-person or online) prior to loan closing and make a minimum borrower financial contribution of at least $1,000 toward the purchase of the home. In addition to meeting CHFA program requirements, borrowers must qualify according to the underwriting guidelines as determined by one of CHFA’s participating lenders.

Down Payment and/or Closing Cost Assistance Options

Homebuyers who use one of CHFA's first mortgage loan programs to finance their home purchase are eligible to use CHFA assistance options to help with down payment and/or closing costs. Even if you contribute towards a down payment, you may still use one of the options below:

Down Payment Assistance Grant: This program offers up to 3% of your first mortgage loan amount (up to $6,000 on a $200,000 mortgage) and does not require repayment.

Second Mortgage Loan: This program offers up to 4% of your first mortgage loan amount (up to $8,000 on a $200,000 mortgage) and repayment of the loan balance is deferred until certain events, such as payoff of your first mortgage, or the sale or refinance of the home, or the home is no longer your primary residence.

Repayment Requirements

Repayment requirements for CHFA down payment assistance options depend on which program you choose. CHFA’s Down Payment Assistance Grant does not require repayment, while CHFA's Down Payment Assistance Second Mortgage Loan repayment is deferred until certain events, such as payoff of your first mortgage (including sale or refinance) or if the home is no longer your primary residence. However, higher interest rates may apply in both cases.

How to Get a CHFA Loan

If you are interested in getting a CHFA loan, the first step is to connect with a lender that is part of their program. Reach out if you would like a connection a CHAFA lender.