Colorado CHFA FirstStep Loan Program

The Colorado CHFA FirstStep Loan Program, offered by the Colorado Housing and Finance Authority (CHFA), is designed to help first-time homebuyers achieve their dream of homeownership. This program provides affordable mortgage options paired with financial assistance for down payments and closing costs, making the homebuying process more accessible and manageable.

Benefits

Offers a 30-year fixed-rate FHA mortgage with competitive interest rates to ensure consistent and predictable monthly payments.
Includes down payment and closing cost assistance to reduce the upfront expenses of purchasing a home.
Provides access to free homebuyer education courses to help buyers prepare for the responsibilities of homeownership.
Can be combined with additional CHFA programs for enhanced financial support.

Eligibility Requirements

Applicants must be first-time homebuyers, defined as individuals who have not owned a primary residence in the past three years, unless purchasing in certain targeted areas.
Income limits apply and vary based on household size and the location of the property being purchased.
The property must be located in Colorado and used as the buyer’s primary residence.
A minimum credit score of 620 is required, though lender-specific underwriting criteria may also apply.
Participants must complete a CHFA-approved homebuyer education course before closing on the home.

Additional Information

The CHFA FirstStep Loan Program is specifically designed to assist low- and moderate-income homebuyers by offering affordable loan options and financial assistance. Administered by the Colorado Housing and Finance Authority, this program supports responsible homeownership and provides a pathway to stable housing and financial stability for Colorado residents.

Frequently Asked Questions About Our Program

What is the CHFA FirstStep Loan Program?

The CHFA FirstStep Loan Program is a 30-year fixed-rate FHA mortgage designed to assist first-time homebuyers, qualified veterans, or individuals purchasing in targeted areas within Colorado. It aims to make homeownership more accessible by offering favorable loan terms and optional down payment assistance.

Who is eligible for the CHFA FirstStep Loan Program?

Eligibility is limited to first-time homebuyers (those who have not owned a home in the past three years), qualified veterans, or buyers purchasing properties in targeted areas. Additionally, applicants must meet specific income and purchase price limits, which vary by county and household size.

What is the CHFA FirstStep Plus option?

The CHFA FirstStep Plus option provides an additional second mortgage loan of up to 4% of the first mortgage amount, capped at $25,000. This zero-percent interest, deferred-payment loan can be used toward down payment, closing costs, prepaids, and/or principal reductions, and is due upon sale, refinance, or if the property ceases to be the borrower's primary residence.

Are there income limits for the CHFA FirstStep Loan Program?

Yes, income limits apply and vary based on county, household size, and whether the property is in a targeted area. It's essential to verify the current income limits for your specific situation.

What are the credit score requirements?

Borrowers are generally required to have a minimum credit score of 620. However, individual lender requirements may vary, and meeting the minimum score does not guarantee loan approval.

Is homebuyer education required?

Yes, all borrowers must complete a CHFA-approved homebuyer education course prior to loan closing. This ensures that buyers are well-informed about the responsibilities and processes involved in homeownership.

What types of properties are eligible?

Eligible properties include single-family, one-unit residences, attached or detached homes, approved condominiums, and manufactured homes on a permanent foundation. The property must serve as the borrower's primary residence.

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Are there purchase price limits?

Yes, the program imposes purchase price limits that vary by county and whether the property is in a targeted area. It's important to consult the current CHFA guidelines to determine the applicable limits for your desired location.

Can the CHFA FirstStep Loan be combined with other assistance programs?

Yes, the CHFA FirstStep Loan can be combined with CHFA's down payment assistance programs, such as the FirstStep Plus option, to further reduce out-of-pocket expenses for homebuyers.

What is the interest rate for the CHFA FirstStep Loan?

The CHFA FirstStep Loan offers a fixed interest rate for the 30-year term. The specific rate is subject to change and should be confirmed with your lender at the time of application.

Are there any fees associated with the program?

Standard loan fees, such as origination and processing fees, may apply. It's advisable to discuss all potential fees with your lender to understand the total cost of the loan.

Is there a minimum borrower contribution required?

Yes, borrowers are required to contribute a minimum of $1,000 toward the purchase of the home. This contribution can come from the borrower's own funds or an acceptable gift.

Are non-occupant co-borrowers allowed?

No, all borrowers must occupy the property as their primary residence. Non-occupant co-borrowers and co-signers are not permitted under this program.

What happens if I sell or refinance my home?

If you sell or refinance your home, any outstanding balance on the CHFA FirstStep Plus second mortgage becomes due and payable. The repayment will include the original loan amount.

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Is there a prepayment penalty?

No, there is no prepayment penalty for the CHFA FirstStep Loan Program. Borrowers can make additional payments or pay off the loan early without incurring extra charges.

Can I use this loan for a second home or investment property?

No, the CHFA FirstStep Loan Program is intended for primary residences only. All borrowers must occupy the property as their primary residence.

Are there debt-to-income (DTI) ratio requirements?

Yes, the program has DTI ratio limits. Generally, a maximum DTI of 50% is allowed with a mid-FICO score of 620 to 659, and up to 55% with a mid-FICO score of 660 or above.

Is mortgage insurance required?

Yes, as the CHFA FirstStep Loan is an FHA-insured mortgage, borrowers are required to pay both an upfront mortgage insurance premium and monthly mortgage insurance premiums.

How do I apply for the CHFA FirstStep Loan Program?

To apply, contact a CHFA-approved participating lender who will guide you through the application process, including verifying eligibility, assisting with necessary documentation, and explaining program requirements.

Is there a deadline to apply for the program?

There is no specific deadline to apply for the CHFA FirstStep Loan Program. However, program availability is subject to funding, so it's advisable to begin the application process as soon as you are ready to purchase a home.