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Here's a brief look (and comparison) of all of the Denver-Area mortgage loan programs available to First-Time Homebuyers.
1) FHA loans
2) VA loans (for qualifying vets)
3) Conventional loans
4) Grant & Down Payment Assistance
• Down payment is 3.5% of purchase price.
• Minimum score of 580 needed.
• Deferred student loan debt is counted.
• Gift funds from qualifying donors can be used towards down payment funds.
• Will average 2 year history for a Self Employed Income, Bonus Income, Commissions & Tips.
• Difficult to finance condos. Condo communities must be on the FHA Approved Condo list.
• Upfront mortgage insurance is 1.75% of the base loan amount (financed into the loan).
• Annual Mortgage Insurance is .85%.
• 'Health and Safety' and 'Deferred Maintenance' items on house must be repaired.
• Credit scores of 640 or above gives everyone the same rates. Scores below a 640 have lowered debt to income ratios - won't qualify as high.
• Veterans only!
• 580 Minimum credit score.
• Entitled vets are eligible to purchase with $0 down up to $458,850 in the Denver Metro Area.
• First-time use comes with a 2.15% Funding Fee (can be financed into the loan).
• Borrowers with 10% or more service related disability are exempt from the funding fee.
• Subsequent use of VA benefit is a funding fee of 3.3% (refinance is .5% (IRRRL).
• Does NOT have any mortgage insurance.
• Condos must be on approved VA list.
• 'Health and Safety' and 'Deferred Maintenance' items must be repaired.
• Most Conventional Loans start at 5% down.
• Many now have a 3% down option to help first-time buyers.
• With 3% Down, the interest rates are typically higher to offset the lower down.
• Mortgage Insurance is dictated by the Loan-to-Value on down payments below 20%.
Most Popular With First-Time Buyers:
• Fannie Mae 'My Community'.
• Fannie Mae 'Home Ready'.
• Freddie Mac 'Home Possible Advantage'.
• Minimum credit score of 580.
• 3% down payment (if at least one co-borrower is a first-time buyer).
• Gifts allowed from a qualified entity.
• Home buyer class required.
• Co-signors may not own other real property.
• Fixed or adjustable rate loans available with interest-only options.
• Loan terms up to 40 years.
• Reduced mortgage insurance requirements.
• Designed for first-time homebuyers with little or no credit history.
• 2-4 Unit properties are considered under the My Community Program with 5% down.
• Special features for public-safety workers (police, fire, healthcare) and teachers:
• Higher debt-to-income ratios.
• Allows for gifted reserves.
• Consideration of part-time and overtime income (12-month history).
• Minimum credit score of 620.
• 3% Down Payment.
• No need to be a First Time Buyer, but cannot own any other real estate at the time of closing.
• Allows for non-occupying co-borrowers, who can also own property separately.
• Most Denver-Area purchases are eligible for no-income limits on these loans.
• First time home buyer class required.
• Allows for 'boarder' income w/5% down (must document a minimum of 9 month payment history).
• Loans not always subject to LLPA (loan level price adjustments). No adjustment to interest rates for credit scores above 680.
• Minimum credit score of 660.
• 3% Down Payment.
• Income limits not to exceed 100% of area’s median income.
• No income limits apply if property located in an Underserved Area.
• Available as 15, 20, and 30-year mortgages.
• First time home buyer class required.
Pros
• More condo loans available through conventional financing options.
• Generally have lower payments compared to FHA loans (with larger down payments).
• Slightly lower down payment - (3% vs 3.5%).
• Condition of property is less important to appraiser.
• No upfront or permanent mortgage insurance (may still have some PMI).
Cons
• Requires higher qualifying credit scores.
• Lower Debt to Income (DTI) ratios of borrower.
• For scores below 720, payments will generally be higher.
• CHFA (Colorado Housing Finance Authority)
• MMA (Denver Metro Mortgage Assistance)
• CHAC (Colorado Housing Assistance Corp)
• DCHP (Douglas County Housing Partnership)
• HOAP (Aurora)
• Del Norte (Denver)
• ACHA (Adams County)
• MCC Programs: Mortgage Credit Certificates
• Closing costs in general are more expensive with DPA loans.
• Loans required to be submitted and approved by DPA authority. Adds a week to a transaction.
• Most or all household members are included as part of the income restrictions.
• 3% Grant for down payment or closing costs.
• 620 Minimum FICO score.
• Does not need to be a First Time Buyer.
• Requires 1st Time Buyer Class.
• Buyer must have a MINIMUM of $1000 into the transaction.
• Income is capped at $95,800 for 2 person household and $111,800 for 3+ person household. Higher for targeted areas.
• Borrower must have their own 3% down payment available (can be gifted).
• No mortgage insurance required.
• Minimum credit score is 680.
• Best suited for 680 – 720 credit scores.
• Allows for up to 2% in additional lender credit by increasing rate.
• Great for lower credit score borrowers who're looking for better interest rates.
• 3% Grant to use towards down payment or closing costs.
• Does not need to be a First Time Buyer
• Requires 1st Time Buyer Class
• Buyer must have a MINIMUM of $1000 into the transaction
• 620 Minimum FICO score.
• Allows for up to 2% in additional lender credit by increasing rate.
• Mortgage Insurance is a reduced rate on this loan.
• Income is capped at $95,800 for 2 person household and $111,800 for 3+ person household. Higher limits on targeted areas.
• Available ONLY in approved areas.
• 4% grant available.
• Interest rate associated with this program is typically the lowest of grant programs.
• Requires 1st Time Buyer class.
• Better rates than CHFA. Faster processing than CHFA.
• FHA or Conventional loan.
• Capped income of $91,885. Only includes the qualifying borrower income - not house hold income.
• Also eligible in Arvada, Aurora, Boulder, Brighton, Broomfield, Centennial, Dacono, Edgewater, Englewood, Golden, Lakewood, Littleton, Parker, Sheridan, Thornton, Westminster, Wheat Ridge, Bennett, Firestone, Castle Rock, and Arapahoe, Boulder, Jefferson Counties (unicorporated).
• Denver & Jefferson Counties.
• DPA at 6% of purchase price or $10,000 (whichever is less).
• 2% rate over 30 year amortization.
• 5-year deferral program available at 6% rate.
• Excludes Arvada and Westminister.
Statewide Program
• $5000 grant.
• 5% rate over 12.5 year amortization.
• Payments are $50 even.
Disability Program for Fully Disabled Persons
• $8,500 loan.
• 1.5% rate over 30 year amortization.
• Payments deferred over the entire 30 years – interest still accrues.
• All programs have roughly $400 in fees (versus $3000 with other programs).
• Funds provided are a grant.
• Must be 1st Time Buyer.
• Purchase price limit of $228,000.
• Borrower can have a maximum of $10,000 in savings.
• Must be in the City of Aurora.
• Maximum of $10,000 (or 5% on Conventional Loans) not to exceed 5% in down payment.
• Borrower must have 1% of purchase price contribution into the transaction (includes appraisal and inspection).
• Must be in Douglas County.
• Borrower must contribute a minimum of $1000.
• 30 year loan at 3% rate.
• DPA Payment comes out to exactly $63.24 per month.
• Shared Equity Program.
• $15,000 loan with all proceeds used towards down payment, closing costs, or principal reduction.
• DCHP provides 20% down payment up to $50,000. Upon sale of home (or refinance) borrower repays back 20% of total home value.
• Must be in City and County of Denver.
• Down payment assistance and closing costs at no specific amount.
• DPA interest rate is 0% for 30 years with no payments.
• Must be 1st time buyer.
• Home buyer education class required.
• Household income cannot exceed 80% of the area median income.
• Targeted areas benefitting of low and moderate income households and for neighborhood revitalization.
• Property location: Denver, Adams, Arapahoe, Jefferson, Douglas and Broomfield Counties.
• Max purchase price of $238,000.
• 5% of purchase price.
• Borrower must have 1% into the transaction.
• Loan forgiven 20% each year for 5 years.
• 30 year loan with no payments and no interest.
• Must attend pre-purchase class.
• Cannot buy in Westminster!
• It is an IRS “Enhancement” – not a loan program!
• Allows a percentage of the interest paid through the year to receive a dollar-for-dollar tax credit on the Federal Return.
• Remaining interest paid is deducted against the Adjusted Gross Income.
• Percentage of interest that receives a credit is dependent on the program.
• CHFA = 20% of interest.
• Denver MCC = 30% of the interest.
Available through:
• Statewide program - available through CHFA (read more further below).
• City and County of Denver have their own MCC program.
• Requires a minimum score of 620.
• Must be a first time home buyer OR the home must be in a “Targeted Area” OR the buyer is a Qualified Veteran.
• Eligible areas are shown on the each programs website.
• First time Buyer as defined by the IRS.
• Requires first time homebuyer class.
• Maximum purchase prices are different from county to county.
• Income limits are the same as outlined on loan programs (i.e. Smartstep or Advantage).
• Must be a first time home buyer OR the home must be in a “Targeted Area” OR the buyer is a Qualified Veteran.
• Eligible areas are shown on the each programs website.
• First time Buyer as defined by the IRS.
• Subject to maximum purchase prices by family size, and targeted or non-targeted areas.
INFORMED COMPARISONS of these Denver-Area mortgage loan programs are readily available to you!
IF YOU'RE THINKING of buying a Denver-Area home soon and would like to know more about any one of these first-time buyer mortgage loan programs, call Michael Dagner for more information at (303) 514-4000.
Michael Dagner is an expert in Denver-Area home sales.
Call today, (303) 514-4000, for help with your home sale or purchase.
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