First Time Buyer Programs Colorado: First time home buyers in CO has some great home financing options available in 2016. In the post below we talk about some of the popular mortgage programs like USDA, FHA, VA and the benefits of each. Call us anytime at ph: 800-743-7556 with questions.
100% USDA RD Home Loan
The complete name of the loan is the Rural Development Guaranteed Housing Loan Program, or RD for short. It is supported by the United States Department of Agriculture and offered through approved USDA lenders and banks. The program is only available on rural properties in select locations around Colorado. Don’t let the word “rural” fool you, many popular suburban locations just outside of Aurora, Castle Rock, Greeley, Fort Collins, etc are still eligible for USDA financing. You can check eligible locations and address here.
USDA Loan Benefits:
- USDA is one of the only programs left that permits 100% financing – no down payment required
- Great for Colorado Teachers, Fire Fighters, Police, etc. Flexibility for first time home buyers
- USDA allows the home sellers to pay buyers closing costs.
- Secure 30 year fix terms at low interest rates.
- No restrictions on when you can move or sell your home, etc.
- Buyers are not required to be first time home buyers.
- No special class, down payment assistance programs needed. Applicants can be approved in minutes.
- Any house that is in good repair and located in a USDA eligible location is ok, regardless of the home seller.
- No loan amount limits with USDA, buyers qualify based on their debt to income.
- Easy USDA refinance options available for home owners that currently have a USDA loan.
USDA Loan Requirements:
- Buyers must have a min 620 credit score to be approved.
- Solid work history for the past 2 years – no unexplained gaps in employment.
- Household income must be below the county limit. Read more about household income limits here.
- The home must be located in a USDA approved locations, see the map link above.
- Mobile homes, rehab homes, land loan, lot loans, build on your own site financing NOT permitted. Home must be existing single family, approved condo or townhome in good repair.
- Primary residence homes only.
- Read more about USDA purchase FAQ’s here.
VA Home Loans
The VA loan program is a great benefit to active military and vets in Colorado. VA and USDA are the only two remaining 100% financing program available today. The program has been offered since 1944 and has opened up the doors to home ownership to many veterans and their families. The VA loan is one of the government loan programs that has less restrictions, and easy to qualify for. The loan can be made without a down payment and has lower fixed interest than other types. The VA application and qualification process is similar to other types of government loans like FHA and USDA. Any interested former military must first apply for a Certificate of Eligibility through the VA, pick out the perfect house and sign a purchase agreement. Don’t have a COE, please contact us below for assistance. Once this is complete the appraisal, home inspection and underwriting process can start.
So exactly who is eligible for VA loans? Colorado vets who have served on active duty and who have been discharged, with the exception of a dishonorable discharge, can apply. A veteran, prior to applying, must have served 90 days during wartime or 181 continuous days during peacetime. Additionally, for veterans enlisted after September 7, 1980 or who began service after October 16, 1981, there’s a two-year requirement. National guards and reservists have a six-year requirement within certain criteria. Surviving spouses have their own set of eligibility requirements. Also keep in mind VA loan benefits can be used more than once.
VA Loan Benefits:
- 100% financing, $0 down payment.
- Lowest fixed interest rates of any mortgage program.
- NO monthly mortgage insurance – or “PMI” as it’s more commonly referred to. This is a huge benefit for military buyers.
- Any single family home, town home, approved condo is eligible. Must meet basic HUD standards in regards to condition. Pretty much all government loan programs follow this same protocol.
- Seller can pay certain allowable closing costs on behalf of the home buyer.
VA Loan Requirements:
- Must be eligible past or present military to be approved.
- 620 credit score required.
- Loan amount limits generally follow basic conforming loan limits of $417,000
- Stable employment with 2 year history.
- Mobile / Manufactured homes not permitted.
Need more assistance on VA home loans? Please visit VA Mortgage Hub here.
FHA Home Loans
The FHA mortgage is a housing loan that is insured by the Federal Housing Administration (FHA) and offered through approved lenders and banks. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. The FHA program was created in response to the economic downturn that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable. Nowadays, FHA loans are very popular, especially with first-time home buyers in major metro areas like Denver, Colorado Springs, Pueblo, etc.
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for in CO because it requires a low down payment and you can have less-than-perfect credit. An FHA down payment of 3.5% is required. Borrowers who cannot afford a traditional conventional down payment of 20 percent or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.
FHA Loan Benefits:
- Up to 96.5% financing.
- Low secure fixed rates – 15 year, 30 year, etc.
- Sellers concessions permitted for closing costs.
- No restrictions on home location like USDA.
- No household income restrictions like USDA.
- Streamline refinance options available for those home owners that currently have a FHA loan.
FHA Mortgage Requirements:
- Must have a steady employment history for the past two years.
- Must have a valid social security number, and have lawful residency in the U.S.
- Must make a minimum down payment of 3.5 percent. The money can be gifted by a family member.
- New FHA loans are only available for primary residence only.
- Minimum credit score of 620 for maximum financing with a minimum down payment of 3.5 percent.
- Minimum credit score of 600 for maximum LTV of 90 percent with a minimum down payment of 10 percent. FHA lenders will use a case-by-case basis to determine an applicants’ credit worthiness.
- Typically you must be 4 years out of bankruptcy and have re-established good credit.
- FHA does have loan amount limits depending on the County. See below.
For more detailed FHA information, please visit FHA Mortgage Source here.
USDA Mortgage Hub serves home buyers nationally 7 days a week. Please contact us with questions at ph: 800-743-7556 or just submit the Quick Contact form on this page.