For most people who are getting ready to buy a brand-new home, though, the cost of a down payment can be stressful and unaffordable.
If you want to be a homeowner in Colorado and are struggling to find the resources to do so, there are options you can turn to. Down payment assistance programs from both the federal and state governments may be the help that you need. There are over 2,000 programs throughout the nation that are run by the state, county, and city governments that are ready to offer their assistance.
Continue reading to learn all that you need to know about down payment assistance programs in The Centennial State.
What Are Down Payment Assistance Programs?
Down payment assistance programs help homebuyers raise the deposit required to purchase a new home.
This is done through grants, low-interest loans, and zero-interest loans. They give a significant advantage to anyone who wants to save money or doesn’t have enough for a large down payment.
Grants Give You Money
Some programs out there will give money to people as a gift when they are looking to buy a home. This money never has to be repaid for any reason, nor does it accumulate interest. Depending on the program and its conditions, you can receive a sum of money granted to you from the state or the federal government.
The conditions for grants will vary from state to state. In Colorado, the Colorado Housing Corporation has a variety of down payment assistance grants for the year 2022. This includes grants from the Metro Mortgage Assistance Plus Program and Turnkey Plus Mortgage Program, which help low to moderate-income families.
Loans That Can Be Deferred or Forgivable
A loan is a sum of money given to you, but then must be paid back over a certain period. There are loans designed for people who need help raising the down payment. These loans are usually paid along with your primary mortgage.
An example of this is the CHAC Down Payment Assistance Program that requires a homeowner to pay a second mortgage loan monthly. It’s intended for first-time buyers with a low income, but also requires them to take a homebuyer education course in order to receive assistance.
Some loans have zero interest while others have a small interest that accumulates over time. Other loans are forgivable, meaning you don’t have to pay them back if you meet certain conditions, such as owning and staying in the home for a specified period of time.
There are also deferred loans, which you only need to repay if you move away, sell, or refinance your home. Unlike forgivable loans, there is no period of time that wipes away a deferred loan; they eventually need to be repaid.
How Do You Qualify for Down Payment Assistance?
Depending on the Colorado zip code you want to reside in, there are a number of ways to qualify for down payment assistance.
This can include reaching certain income limits within the given area in comparison to others living nearby. Other criteria could be purchasing a home within a specific location that is approved to give assistance from the government or being within a price range when you buy the home.
You may also need to take a course in home-buyer education. You earn a certificate from completing it, which will make you eligible for different grants or assistance in different cases. The classes can sometimes be free, but in some cases can cost around $75 for online courses and as low as $15 for in-person classes.
At the same time, most down payment assistance programs will be geared towards first-time home buyers. But what if this isn’t the first time, you’re purchasing a home? You can still be classified as a first-time home buyer if you haven’t owned a home within the past three years.
The Pros and Cons of Down Payment Assistance Programs
There are a lot of positives that come with down payment assistance programs, but there are negatives as well.
With down payment assistance, it will be much easier to afford a brand new home and you may get lower rates that can ease the monthly payments. However, this can also come with added repayment stress later on, and there could be some restrictions while you’re living in the home.
And yet, any first-time home buyer can still need down payment assistance when trying to find a new place to live. So, finding the best mortgage lender in Colorado may be worth the added stress later on if it means finding a place to call home at a reasonable price.
Even with some eligibility requirements that might seem restrictive in some cases, the benefit of having down payment assistance available is better than not having it at all.
You Can Get Down Payment Assistance in Colorado
After reading through our guide to down payment assistance programs in Colorado, you should have a better understanding of why they are incredibly helpful to first-time home buyers. It’s never easy buying a home, but that doesn’t mean you need to do so alone. Down payment assistance can be the answer if you’re struggling to afford the home you want.
Looking to secure a mortgage in Colorado? Get in touch with us at Spring Home Mortgage. Our mortgage experts will guide you through the home loan process, helping you get approved ahead of time!