This article is an update of a previous article.
If you are trying to buy a home in Colorado and need some sort of financial assistance such as flexible mortgage loan requirements or very competitive interest rates, affordable payments, and perhaps down payment assistance then there is good news for you. There are quite a few mortgage programs as well as down payment assistance programs available to you if you qualify.
These programs are offered by many of your local municipalities and primarily 3 state agencies: The Colorado Rural Housing Development Corporation, The Colorado Housing And Finance Authority, and The Colorado Housing Assistance Corporation.
The Colorado Rural Housing Development Corporation – Colorado Housing Enterprises (CHE)
Flexible First Mortgage Programs. The CRHDC affiliate Colorado Housing Enterprises (CHE) works closely with lenders to help clients access affordable first mortgage products available to qualified buyers. These programs for low to moderate income first time buyers offer low downpayment options, low interest loans, no mortgage insurance premiums and flexible qualifying requirements.
Down Payment Assistance Program (DPA). CHE provides first-time homebuyer down payment and closing cost loans and grants (when available), to qualifying households.
Hardship Loan Program. This program, started by CHE in January 2007, is a foreclosure prevention strategy that combines education and counseling with a loan product.
502 Loan Leverage. CHE leverages United States Department of Agriculture (USDA) Rural Development (RD) 502 mortgage loans. CHE provides a 20% loan-to-value first mortgage loan and RD provides an 80% loan-to-value second mortgage loan. The program enables low-income qualifying rural borrowers to replace equity with the CHE product, and the blended loan rates makes the home affordable.
The Colorado Housing And Finance Authority (CHFA)
CHFA JumpStart2 Tax Credit Loan Program. This program enables first time homebuyers in need of closing costs and/or downpayment assistance to borrow funds on a short term basis under the new federal First-Time Homebuyers Tax Credit. Eligible borrowers may receive from CHFA a loan in an amount up to three and one-half percent (3.5%) of the first mortgage loan amount or $6000, whichever is less, to be secured by a second mortgage loan. This second mortgage loan is only available in conjunction with a CHFA JumpStart2 Tax Credit First Mortgage Loan.
The Mortgage Credit Certificate (MCC) program. This program will help you save money each year that you live in your home! With the MCC program you can claim up to 20 percent of your paid mortgage interest each year as a tax credit on your federal IRS tax returns. The remaining 80 percent is still eligible for the home mortgage interest deduction. Every year, you may claim a dollar-for-dollar reduction of income tax liability on 20 percent of the mortgage interest on your first mortgage, reducing the amount of federal taxes owed.
The Colorado Housing Assistance Corporation (CHAC)
The Colorado Housing Assistance Corporation is a non-profit association that offers loan programs and financial counseling. They provide free foreclosure counseling and loans for low to moderate income residents who are facing foreclosure.
Foreclosure Prevention Loans. CHAC’s Foreclosure Prevention Loan program helps low to moderate income homeowners keep their home in the face of foreclosure by way of a secured loan that brings the homeowner’s mortgage current, allowing them to resume regular monthly payments. In some cases, if a home owner has an ARM loan that will reset into an unaffordable monthly payment, assistance could by considered when trying to refinance into a fixed rate affordable mortgage. Homeowners must meed CHAC criteria in order to qualify.
Foreclosure Prevention Counseling. CHAC provides FREE Housing Counseling Services. Their housing counseling entails meeting with a HUD approved housing counselor to discuss your financial information, discuss your hardship and assess your options for preventing a foreclosure.
Down Payment Assistance Programs In Colorado
There are a number of down payment assistance programs available in Colorado.
The CHAC has a down payment assistance program called the Mortgage Assistance Loan. Qualified and eligible home buyers can get up to $10,000 in the form of a second mortgage to assist with down payment and closing cost requirements of their first mortgage.
If you live in Arapahoe County, Adams County, Boulder County, Eagle County, El Paso County, Fremont County, Chaffee County, Custer County, Lake County, Huerfano County, Las Animas County, Jefferson County, Weld County, Bent County, Crowley County, Otero County, Cheyenne County, Elbert County, Kit Carson County, Lincoln County, Logan County, Morgan County, Phillips County, Sedgewick County, Yuma County or Washington County you may be eligible for down payment assistance. The specifics of these programs vary so you will need to check with your lender to see what options you have in your area.
These locally based mortgage and down payment assistance programs offer help in the form of second mortgages. They are often referred to as acquisition assistance loans. In Arapahoe County, for example, you can get up to $10,000 from the Colorado Housing Assistance Corporation. Typically these mortgages have to be paid back.
The program in Arapahoe County allows no payments for the first five years. After that the interest rate on the second mortgage will be 3%. In Boulder County you can borrow up to $15,000 or 8.5% of the purchase price whatever is less.