Over the last couple of months, you have been scrolling through house listings, daydreaming about your first future home. You have been diligent about your spending in an effort to save money and improve your credit score. Even so, will each house you look at, the down payment tends to be an obstacle, especially as a first time home buyer.
As a professional mortgage broker, the Reichert Mortgage Team knows that down payments can be discouraging. However, with our expertise as a mortgage broker in Colorado Springs, we have resources to help you find the perfect down payment assistance program and secure your dream home.
What Are Down Payment Assistance Programs?
Down Payment Assistance Programs are designed to help first-time homebuyers reduce the down payment needed to purchase a home. Using loans and grants, these programs allow more flexibility for homebuyers in the housing market.
To qualify for a down payment assistance program, individuals must meet certain requirements. Most assistance programs follow similar guidelines, while some have additional specifications. The following are true of most assistance programs:
- First-time home buyer (or has not owned a house in three years)
- The home will be used as the buyer’s primary residence
- You work with an approved mortgage lender or broker for the loan program
- As a buyer, you must have a low or moderate-income
To secure down payment assistance, you can get help from a mortgage lender or broker. The lender will match you with a program that fits your needs and works your current mortgage program. They will then assist you throughout the process, including application submissions and borrower counseling sessions.
Colorado Housing Assistance Corporation
The Colorado Housing Assistance Corporation (CHAC) is one of the best down payment assistance programs in Colorado. CHAC provides first-time homebuyers with flexible loans that have low interest and are recorded as a second mortgage. As with all down payment assistance programs, CHAC has specific requirements you must meet:
- You have not owned a home for the last three years
- You do not own other residences
- The home you are purchasing will be your primary residence
- You disclose all sources of income and assets for the individuals (over 18) that will reside in the home
- If requested, you can provide proof of legal residency for all household members
With the CHAC program, you will also need to attend a CHFA/CHAC approved first time home buyer class prior to beginning the application process. Once complete, your mortgage lender will assist you with the initial application submission process.
Chenoa Fund
The Chenoa Fund provides down payment assistance programs in an effort to make housing more affordable for buyers. The Chenoa Fund is administered by a federally chartered government entity, the CBC Mortgage Agency. This fund is a fantastic option for home buyers, as it does not require you to be a first-time borrower. The Chenoa Fund also offers assistance with FHA loans and Conventional loans.
FHA Loans
The Chenoa Fund offers three FHA Loan down payment assistance options, including:
- Chenoa Fund DPA Edge: Soft Second product
- 30-year term
- 0% interest rate
- No monthly payment
- Second mortgage
- Minimum Requirements: 620 credit score and qualifying income
- Chenoa Fund Edge Repayable Second product
- 10-year repayable second, 0% interest rate
- OR 30-year repayable second, 5% interest rate
- Minimum Requirements: 620 credit score
- Chenoa Fund Rate Advantage program
- You can lock your first mortgage at a comparable rate
- Minimum Requirements: 640 credit score, qualifying income, a debt-to-income ratio of 50% or less
Conventional Loans
Conventional Loans are a great option for some home buyers as you only need a credit score of 640 and there are not any household income limitations. The down payment assistance is offered by CBCMA to those who qualify for a 97% LTV conventional first mortgage. This mortgage must be under Fannie Mae®’s HomeReady® program.
VA Loans Down Payment
If you are a veteran, choosing a VA Loan is likely your best option. Following World War II, the VA loan program was established as part of the G.I. Bill of 1944. One of the VA Loans greatest benefits is that they do not require a down payment.
To be eligible for VA Loans and the benefits they have to offer, you need to meet at least one of the following requirements:
- You served 90 consecutive days of active service during wartime, OR
- 181 days of active service during peacetime, OR
- 6 years in the National Guard or Reserves, OR
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
If you are not sure if you meet the qualifications, take this short survey to verify.
Colorado Down Payment Assistance | The Reichert Mortgage Team
At the Reichert Mortgage Team, we strive to provide the highest quality service possible as home loan specialists. This is why it is extremely important to us that we educate our clients on all of their options, especially those looking for first-time home buyer loans, VA loans, or any other loan type. If you would like to learn more about down payment assistance programs in Colorado, give us a call today.
