Fort Collins, CO - First Time Home Buyer

Are you a first time home buyer looking to purchase a home in Fort Collins, Colorado?  On this page you can learn about some of the different types of mortgage programs that are available to first time home buyers in Colorado.  You may also view down payment assistance programs that are currently being offered in Colorado.

Fort Collins, CO – First Time Home Buyer Loans

Below are some mortgage programs that are available to first time home buyers.

Types of Mortgages:

• Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
• FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
• USDA Loans – USDA loans provide home buyers the opportunity to purchase a rural home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
• VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
• Jumbo Loans – Any mortgage that does not meet the conforming loan limits is a jumbo loan.  You can lookup the 2023 conforming loan limits for Larimer County, CO (or any other county) using this conforming loan limit lookup tool.  If you want to buy a more expensive home, and have the income to qualify, jumbo lenders offer loan amounts up to $5,000,000.
• Non-Prime Loans – If you do not qualify for any of the above types of loans, you may consider a non-prime or non-qm loan.  These programs are especially helpful to self-employed borrowers, and a variety of people with credit issues (such as low credit scores and/or a recent bankruptcy, foreclosure, or short sale).  Regardless of your situation, you may want to learn more about non-prime loans if you do not qualify for any of the other types of mortgages featured above.

These are some of the options that are available to first time home buyers.  If you would like to have a mortgage loan representative help you understand what options may be available to you, we can match you with a lender that offers first time home buyer loans in Colorado. The lender that we match you with will provide you with a free consultation, and also the opportunity to get pre-approved for a home loan.

Click here to have a mortgage lender contact you

Fort Collins, CO – Down Payment Assistance Programs

First time home buyers in Fort Collins may be eligible to receive down payment assistance.  This includes programs that are offered throughout the entire state of Colorado, as well as a program offered in Fort Collins.

City of Fort Collins – Home Buyer Assistance Program

Fort Collins offers its income-eligible residents loans that partially cover down payments and closing costs for those that have not been on a home title in three years. This loan is then expected to be paid back in full if the home is rented, sold, transferred or a second loan is taken. That being said, eligible households can only be awarded up to 5% (up to $15,000) of the property’s total cost.

The process starts with those interested in assistance taking a home ownership class offered through Neighbor to Neighbor. Founded in 1970 in Fort Collins, Neighbor to Neighbor is a foundation of Larimer County that helps prevent homelessness and foreclosures while continuing to educate the community in regards to caring for and maintaining their properties responsibly. The class is entirely free. Due to limited space, attendees must register in advance. Luckily, there are quite a few options, with one class usually scheduled on the third Saturday of each month. It should be noted that this class is expected to be attended prior to closing, and the online class option does not count.

Following the successful completion of this class, the loan then looks at the type of housing in question. All units save for mobile homes on rented land are eligible. Further requirements include:

• The property must be located within Fort Collins city limits.
• The appraised value and purchase price has to be less than $361,000.
• Should the property have been occupied in the past 90 days, potential borrowers must reach out to the City of Fort Collins to determine if it is still eligible.

Once the property is determined to fit the requirements, the process then moves on to the borrower. For this, income limits are enforced with limits that are based on the total number of people in the household.  For instance, one person means a limit of $47,700 while eight people means a limit of $89,900. Beyond this, total housing expenses cannot exceed 38% of a family’s gross income and the family’s total debt cannot be more than 42% of this income. There is also a $20,000 limit on gift funds and buyer contributions unless special approval is sought.

Other various guidelines include that the owner must deposit the greater amount of either $1,000 or 1% of the purchase price with their own money. The home must be used as the main residence so long as the loan is in effect. If the house is not used this way, the loan is immediately forfeit and must be paid off in full. The City Staff has to inspect the property to confirm its livability and any home built prior to 1978 has to have an inspection for lead-based paint.

Unfortunately, the Fort Collins Home Buyer Assistance program does have limited funds meaning it is awarded on a first-come, first-served basis. The year for them begins in November and runs until the funds are depleted, closing everything off until the following November.

Want to learn more?  Visit the official website for the City of Fort Collins.

Get Matched with a Mortgage Lender

A loan representative can help you determine what mortgage programs you may qualify for, and also check your eligibility for down payment assistance.  If you would like to receive a free consultation, we can help match you with a mortgage lender that offers first time home buyer loans in Colorado.

Click here to have a mortgage lender contact you

First Time Home Buyer Questions 

Below are some of the most frequently asked questions about first time home buyer loans:

How much do I need for a down payment?
The minimum down payment requirement will depend on the type of mortgage program.  USDA and VA loans do not require any down payment.  FHA loans only require a 3.5% down payment (and allow down payment assistance to be used).  Conventional loans typically require either 3% or 5% down.   The minimum down payment for a non-prime loan is usually at least 10% (or higher).

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in.  There are maximum loan limits for each type of mortgage program which are set at the county level.  Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Are there mortgage loan options for borrowers with bad credit?
Yes, both FHA loans and non-prime loans are available to borrowers with lower credit score, and other credit challenges.  The minimum credit score required for an FHA loan is 500.  For non-prime loans, there are lenders that allow a borrower to have a credit score even below 500.  Non-prime loans also do not have any waiting periods after a bankruptcy.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

How do I find out if I qualify for a mortgage?
It is easy to find out what mortgage programs you may qualify for.  We can match you with lender that offers free consultations, and they can help you get pre-approved (and also compare what options may be available to you).  To have a mortgage lender contact you, request to be matched with a lender.