Your Complete First-Time Home Buyer Roadmap for Colorado
Buying your first home in Colorado is exciting—and overwhelming. Between understanding loan programs, saving for a down payment, and competing in a strong market, first-time buyers face unique challenges. This guide cuts through the noise with practical, Colorado-specific advice.
Am I Ready to Buy?
Before diving into programs and rates, let's address the fundamental question. You're likely ready to buy if:
- Stable income: At least 2 years in the same field (doesn't have to be the same employer)
- Credit score: 620+ for most loans, 580+ for FHA
- Savings: Enough for down payment (3-3.5% minimum) plus closing costs (2-4% of loan)
- Debt-to-income: Total monthly debts under 43% of gross income (including future mortgage)
- Plan to stay: Generally, you should plan to stay at least 3-5 years to recoup buying costs
Don't check every box perfectly? That's okay—most first-time buyers don't. Let's explore your options.
Best Loan Programs for Colorado First-Time Buyers
1. Conventional Loans (3% Down)
The most common option for buyers with good credit. Requirements include:
- 3% down payment minimum
- 620+ credit score (740+ for best rates)
- Private mortgage insurance (PMI) until you reach 20% equity
- Can be used for primary residences, second homes, and investment properties
2. FHA Loans (3.5% Down)
Government-backed loans with more flexible requirements:
- 3.5% down with 580+ credit score
- 10% down with 500-579 credit score
- More forgiving of past credit issues
- Mortgage insurance required for the life of the loan (can refinance later)
- Property must meet FHA standards
3. VA Loans (0% Down)
For veterans and active military—the best deal in mortgage lending:
- No down payment required
- No PMI
- Competitive interest rates
- Must have qualifying military service
Learn more about VA loans in Colorado.
4. USDA Loans (0% Down)
For properties in eligible rural areas (more of Colorado qualifies than you'd think):
- No down payment
- Income limits apply (varies by county and household size)
- Property must be in USDA-eligible area
- Great option for mountain communities and outlying areas
Colorado Down Payment Assistance Programs
Colorado offers several programs to help with down payment and closing costs. These can be combined with the loan types above.
CHFA Down Payment Assistance
The Colorado Housing and Finance Authority (CHFA) offers:
- Up to 3% of first mortgage loan amount
- Provided as a second mortgage (no interest, no monthly payments)
- Paid back only when you sell, refinance, or pay off the first mortgage
- Income limits apply (up to $149,700 for most Colorado counties in 2026)
- Purchase price limits vary by county
Metro Mortgage Assistance Plus (Metro DPA)
Available throughout Colorado, not just metro areas:
- Grant up to 4% of loan amount (doesn't have to be repaid)
- Can be used with FHA, VA, USDA, or conventional loans
- Minimum 620 credit score
- Slightly higher interest rate than non-DPA loans
City-Specific Programs
Many Colorado cities offer additional assistance:
- Denver: Metro DPA, city employee programs
- Aurora: HOME Investment Partnerships program
- Boulder: House to HOME program for workforce housing
- Colorado Springs: Various city and county programs
The First-Time Buyer Timeline
6-12 Months Before Buying:
- Check your credit reports (free at annualcreditreport.com)
- Pay down credit cards below 30% of limits
- Save for down payment and closing costs
- Avoid opening new credit accounts
- Gather documentation (tax returns, pay stubs, bank statements)
2-3 Months Before:
- Get pre-approved for a mortgage
- Research neighborhoods and set priorities
- Find a real estate agent experienced with first-time buyers
- Start attending open houses to calibrate expectations
Active House Hunting:
- View properties with your agent
- Move quickly when you find the right one (have your pre-approval ready)
- Make offers based on agent guidance and market conditions
- Be prepared for potential competition
Under Contract (30-45 days):
- Complete loan application with final property details
- Home inspection (always get one!)
- Appraisal ordered by lender
- Title search and insurance
- Final loan approval and clear to close
- Closing day: sign documents and get your keys!
Top 5 First-Time Buyer Mistakes
1. Waiting for "Perfect" Conditions
There's never a perfect time to buy. Rates might drop, but prices usually rise. Buying builds equity; renting doesn't. If you can afford to buy now, the math usually favors doing so.
2. Not Getting Pre-Approved First
Shopping without pre-approval wastes time and weakens your offer. Sellers take pre-approved buyers seriously—it shows you can actually close.
3. Making Large Purchases Before Closing
Buying a car, furniture, or appliances on credit before closing can tank your loan approval. Wait until after you have the keys.
4. Skipping the Home Inspection
Even in competitive markets, always get an inspection. The cost ($400-600) can save you from tens of thousands in hidden problems.
5. Maxing Out Your Budget
Just because you qualify for $500,000 doesn't mean you should spend it. Leave room for repairs, furnishings, and life's surprises.
Colorado-Specific Considerations
Mountain Properties: If you're dreaming of a ski condo or mountain cabin, be aware these often require larger down payments and have unique considerations like HOA fees, access, and insurance. Start with a primary residence in the Front Range if you're stretching your budget.
High Prices: Colorado's median home price exceeds $550,000. Don't be discouraged—focus on what you can afford, build equity, and move up later.
Property Taxes: Colorado has relatively low property taxes (around 0.5% of home value annually), which helps offset high purchase prices.
Ready to Take the First Step?
The journey to homeownership starts with understanding your options. Get pre-approved with Cedar Home Loans—we specialize in helping Colorado first-time buyers navigate the process, find the right loan program, and close on their first home.
Questions? Contact us or check our FAQ page for quick answers.
