In the past few years, the mortgage industry has had a huge shake-up – and the real estate market in Colorado Springs was no exception. Fewer people can qualify for home loans, and refinancing your home can be more difficult.

However, just because things are different doesn’t mean that options don’t still exist, especially for first time home buyers. Yes, loans can be harder to qualify for than they were several years ago, but there are still some great mortgage options, especially for first time home buyers in Colorado Springs.

VA Loans for Colorado Springs Military

If you or your spouse is in the military, a VA loan might be a great option if you’re looking for your first home in Colorado Springs (or Fountain or Monument!). Given there are 6 military bases in the area, this is a very popular way to finance a home in the region. VA loans are generated by regular lenders, but the US Department of Veteran’s Affairs guarantees that they’ll repay the lender if you have trouble making payments.

In El Paso County, a VA home buyer can get a home for up to $424,100 with a zero down payment. Given the average home price in Colorado Springs is nearly half that amount, this means you have a HUGE variety of homes that you can purchase with a VA loan.

FHA Loans

If you’re not in the military and not a veteran and don’t have a 20% down payment handy, you can consider getting an FHA loan. An FHA loan is very popular with first time home buyers because you only need to put down 3.5%! In El Paso County, you can purchase a home up to $271,050, and there’s no minimum credit score to qualify. The qualification for the FHA loan is based on a variety of other factors. Interest rates on FHA loans are generally pretty competitive, but you won’t get exactly the same low rates that a 20% down conventional home buyer would get.

Don’t have 3.5% down?

The average home price in Colorado Springs right now is around $260,000. A 3.5% down payment would be $9100. Not everyone has that kind of cash just sitting around in a savings account.

One option is to ask a family member to gift those funds to you. They can’t loan it to you, but you can accept and use a gift. Talk to your lender about how long those funds need to be in your name to qualify for a home loan.

Another option may be to get the money from a retirement account, like an IRA or a 401(k), if those are available to you.

However, if those aren’t options, you can see if you qualify for down payment assistance.

Down Payment Assistance Loans

A government program called CHFA can loan you 3-4% towards your down payment. The Colorado Housing Finance Authority (CHFA) will loan a first time home buyer 3.5% for a down payment. Bear in mind – this assistance is a LOAN, but there are some nice advantages.

First, the loan is interest-free. The balance won’t get bigger over time!

Second, you don’t have to make any payments on the loan. You won’t have to pay off the down payment loan as you pay your mortgage.

Third, you don’t have to pay it back until you:

  • Pay off the mortgage
  • Refinance the mortgage
  • Sell the home

The CHFA 3.5% down payment program is a great option if you’re looking for a home for sale in Colorado Springs as a first time home buyer.

Down payment Assistance Real Estate Bond Money

One more option to get that down payment is to see if you qualify for Bond Money.

Bond money is available through different programs, like the El Paso County Turnkey Bond program. This money is available to help first-time homeowners get a down payment and purchase their first home.

Both the CHFA and the Turnkey programs have income and credit restrictions, and generally mean you will have higher interest rates on your mortgage. However, the assistance they give can be worth it to get you over the hurdle and into your first home!

So, if you are a first time home buyer in Colorado Springs, you definitely have options.

For more information on how to qualify for a mortgage if you are a first time home buyer in Colorado Springs, please contact Mariana Wagner at Mortgage Central: 719.650.3952