One of the most misunderstood benefits for potential Colorado Homebuyers in today’s real estate market, are the multitude of Down-Payment Assistance (DPA) Programs available in Colorado for not only first-time homebuyers, but repeat homebuyers, and even homebuyers who plan to keep another home as a rental.
By far the best DPA (down payment assistance) available to prospective Colorado Homebuyers is the National Homebuyer’s Fund, or NHF. NHF is located in Sacramento California, and they service primarily the state of California, but also provide some of their programs in other states as well, with Colorado being one of those approved states.
Currently NHF is providing a grant of 5% of the initial mortgage loan amount to be used by an eligible Colorado homebuyer for their down-payment and/or closing-costs and pre-paid expenses. This grant has no strings or rubber-bands attached, unlike most of the other DPA programs available to Colorado’s prospective homebuyers, NHF’s grant does not require any sort of repayment, nor is any sort of future repayment expected when the buyer ends up selling the home, and is provided to the home-buyer at closing.
The other unique factors of NHF’s program are as follows:
- Repeat homebuyer’s are eligible. Most other DPA’s require that eligible recipients be First-Time Homebuyers. This means a current homeowner who’s is selling a home, and purchasing a new home, can utilize NHF’s program for the new purchase.
- Eligible homebuyers can own another home. There is no other DPA available in Colorado that will allow a homebuyer to own another home. This is exciting, because this will help those potential homebuyers who’d like to purchase a new home, but are still in a position where they can’t sell their current home, or don’t want to sell their current home, and would like to retain their home as a rental home.
- Allows for Conventional mortgage loans. Most DPA programs, only allow for government backed mortgage loans, NHF does allow for a homebuyer to utilize a Conventional mortgage loan, however there are some minor restrictions. Contact me with questions regarding the requirements for Conventional borrowers.
How the Down Payment Grant for Colorado Works:
Other then depending on what type of mortgage loan the homebuyer will utilize, it’s simple:
FHA loans require a prospective homebuyer to invest a minimum 3.5% down-payment, so with NHF’s 5% down payment Grant for Colorado homebuyers, they would have enough for the 3.5% down-payment, as well as another 1.5% they could apply to the closing-costs and pre-paid expenses charged to obtain the mortgage loan. Typically closing-costs and pre-paid expenses on the NHF program will come out to around 3% of the home’s purchase price, so the buyer can either come up with any remaining funds needed on their own, get a small gift from a family member, and/or negotiate with the Seller and ask that they pay the remainder of their required finance charges.
Conventional mortgage loans require that a prospective homebuyer invest a minimum 5% down-payment, so with NHF’s 3% Grant, the homebuyer would need to come up with an additional 2% down-payment, as well as approximately 3% for the closing costs and pre-paid expenses charged to obtain the mortgage loan, however depending other eligibility factors, the buyer can come up with the remaining 2% down-payment on their own, or get a gift from a family member, and for their closing costs and pre-paid expenses, they can again, come up with the funds themselves, get a gift, and/or ask that the Seller pay all or some of their required finance charges.
Although NHF’s program by far is the most superior available, there are other DPA programs available in Colorado, that are both available statewide, and many that are specific to city and/or county, which may or may not have other advantages. To be sure that you’re looking into all options including the NHF’s down payment grant for Colorado Homebuyers, be sure to check out my Down-Payment Assistance Finder, and I will look into each and every available DPA specific to your situation. CLICK HERE to get to the DPA Finder.