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When you buy a home, one of the most anticipated upfront costs is the down payment. Many believe they need to put 10 to 20 percent down, but that is not always the case with many assistance options available. However, with home prices being so high in Colorado, even a down payment that is a small percentage of a home purchase price can add up to thousands of dollars. Therefore, it’s important to know that there may be help available and, in some cases, even more help than you think.
The Basics
There are several down payment assistance options available for Colorado homebuyers to help with the cost of your down payment. Some are grants, which don’t have to be repaid. Others include second mortgage loans, also known as second liens or “silent seconds,” which do need to be paid back, some at the time of refinance or sale of the property. Such grant and second mortgage loans may result in a higher interest rate on your first mortgage loan.
Layering Down Payment Assistance
You may be able to use more than one down payment assistance option with your loan program. For example, with some CHFA loan programs, a borrower may be able to use one of our down payment assistance options and pair it with a program from other qualified entities such as Colorado Housing Assistance Corporation (CHAC). This could lead to significant upfront savings.
Where Do I Start?
To learn about down payment assistance options and determine the best plan for your individual circumstance, work with a lender who is experienced with various available support programs and options. When selecting your lender, consider asking these interview questions.
In addition, click here to view a list of homeownership assistance programs in Colorado published by the U.S. Department of Housing and Urban Development (HUD). Be sure to verify the status of any program you’re interested in with the organization listed directly.
To learn more about CHFA’s programs and access consumer resources, visit chfainfo.com/homeownership.
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