Best Features of Colorado FHA Loans for first time homebuyers

Two of the key challenges that face first time homebuyers is raising a down payment amount and having a poor credit history. Many first time homebuyers have many financial needs that may not let them start saving for down payment. By reason of being first time homebuyers, many people have not had time to put in order their FICO scores. In spite of these challenges, the dream of many people is to access a mortgage that they can use to buy their homes. There are various programs that have been set up to address the challenges that many first time homebuyers face in accessing credit. One of the programs backed by the government to assist people with poor scores and low down payment is Colorado FHA loans. The FHA program is designed to support first time homebuyers with low scores and poor credit history to buy home. The FHA home loans in Colorado have various features that make them suitable for people with poor scores and imperfect credit history. These are as follows:

• FICO scores-many mortgage programs are very strict as regard FICO score requirements. Some have set their minimum scores too high to be attained by first time homebuyers. For instance, to qualify for a conventional loan, you must have a minimum score of 640. However, when applying for Colorado FHA programs, you need a minimum score of 500. In case you want to put a low amount down of 3.5% of the total loan amount, you need to attain a minimum of 580 FICO scores. The good news with this mortgage is that you can still apply for it even if you don’t have FICO scores. The lender will apply other information sources of your credit to reconstruct your score.

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• Low down payment-This is one of the best features that make this mortgage the best option for first time homebuyers. Many first time homebuyers may not have enough amounts to put down when applying for a conventional mortgage. This is because the minimum amount that you put down when applying for a conventional mortgage is 20% of the total loan you’re borrowing. However, when you apply for FHA home loans in Colorado, you’re only required to put down 3.5% of the total loan amount.

• Blemished credit history-If your credit history is tarnished because of bankruptcy or foreclosure situation, you’ll still be eligible for Colorado FHA loans provided that you meet simple conditions. As compared to conventional loans, the waiting period to rectify your credit is two to three years depending on the situation which caused the imperfection. For example, if you have encountered a bankruptcy situation, you wait for two years to elapse before you apply for the mortgage.

First time home buyer programs in Colorado

Introduction

First time home buyers in Colorado may find it hard to purchase houses because of the increasing prices. Despite, the increased prices the houses are selling fast, making it even harder for first time home buyers. However, there are many programs which have been designed to help them to achieve their dream of homeownership. National and state programs can make homeownership easier if the borrower gets information on them. This article focuses on some of the Colorado Housing and Finance Agency (CHFA) programs that are meant to help first time home buyers to achieve their dreams. The programs are explained below.

CHFA Smart step loan

This loan program is meant for first time home buyers in Colorado who may not be able to raise enough down payments required by other mortgage lenders. The borrower should have a credit score of 620 and above in order to enjoy the low rates offered through CHFA Smart step loan program. Those who qualify for the program can combine it with down payment and closing cost assistance. It offers mortgage at a fixed rate and a loan term of 30 years. The borrower is also required to undergo a homebuyer education training course which can be done online. CHFA approved lenders has their underwriting process which the borrower should meet.

CHFA preferred loan program

This is a state mortgage program allows a borrower to make only 3% down payment. The monthly mortgage insurance required is lower compared to other programs in Colorado. The down payment and closing cost can be paid using the CHFA down payment assistance. The borrower is allowed to cancel the mortgage insurance when they attain 80% loan to value. Those who meet the eligibility criteria can increase the money saved using the CHFA mortgage credit certificate. The borrower should have a credit rating of 620 and meet income limits for them to get approved for the loan.

CHFA HomeAccess program

Those with physical disability face unique challenges when seeking to buy homes for the first time. The CHFA home access program helps people with disabilities or parents of a handicap to own home by lowering the down payment required. The borrower with a disability gets some money during the closing, which is not repaid for 30 years. This amount is sometimes forgiven if one follows the terms and conditions to the later. Those with small income can benefit from the program although it has limits from those mortgage lenders approved to issue HomeAccess loans to first time home buyers in Colorado.

Conclusion

The above programs are, but a few meant for first time home buyers in Colorado. The borrowers can take advantage of them because it gives reasonable rates, and the buyer can use down payment assistance. Those with a disability can make their dream of homeownership the come true through HomeAccess program.