Today, it is quite tough for a first-time home buyer and even for an existing homeowner to buy a new property, due to the soaring real estate prices in Colorado, and in all big states. Moreover, the headache of cumbersome mortgage documentation process, credit score requirements, and stringent loan approval criteria plays its part. However, there are certain home-buying programs that assist individual buyers in effortlessly owning a property. Here, you can visit the website of the Colorado Housing and Finance Authority (CHFA) for more information about the same, and look for a CHFA participating lender, bank, or financial institution that lends on affordable terms.
As a borrower, if you’re looking for ‘quick approval’ home loans in Denver on easy repayment terms, low monthly mortgage rates, and minimum credit checks, it is advised to partner with a mortgage broker. They can guide you through the right steps and procedures for finding a borrower in your city or state who lends on flexible terms, and with bare minimum clauses, terms & conditions. This is how you get approved for a mortgage home loan in Denver CO, or in any other place. In fact, there’s a mortgage loan specialist and financial consultant like “Affordable Interest Mortgage” that can readily help, and walk you through the entire process, right from day one.
Requirements for a Mortgage Loan in Denver
In order to be eligible for a conventional home loan in Denver CO, you need to fulfill the following criteria, as set by the federal and state government.
- A minimum credit score of 620, and a higher score for availing the benefit of a low monthly interest rate.
- A minimum down payment of 3% on the actual purchase price of the property.
- A regular source of fixed income and permanent employment with a registered entity.
- NO existing bad debts or previous loan defaults.
- A debt-to-income ratio of less than 50%, though it is recommended to have a DTI of no more than 43%.
Types of Mortgages
Broadly speaking, there are 2 distinct types of mortgage loans; Conventional and Government Sponsored. A conventional mortgage Denver is one, that is NOT backed by the government, unlike the FHA, VA & USDA loans. Instead, it is backed or financed by a private bank, lending agency, or any other financial institution like a credit union. As they are not sponsored, insured, or guaranteed by the federal government, they come with more stringent income and credit score requirements. Conventional mortgages require a comparatively higher down payment and better credit score than sponsored programs.
On the other hand, VA and FHA loans have far more lenient credit scores, income, and employment status requirements, with very little or NO down payment at all in some special cases. One of the biggest benefits of a conventional loan is that a borrower can secure a larger amount of money than government-sponsored loan programs. Most importantly, you’re able to choose between a fixed and ‘variable rate’ mortgage home loan in Denver, or elsewhere. One can also go for a Jumbo mortgage in Denver, to finance a new home or property that far exceeds the limitations and conforming loan limits set by Freddie Mac and Fannie Mae. As of 2023, the conforming loan limit for a single-family home in most areas of the country is $726,200, and if it exceeds this amount, it is considered a Jumbo loan. Thereafter, one with low to moderate income can opt for USDA guaranteed loans in rural areas.
Key Takeaways of a Colorado Housing Finance Authority (CHFA) Loan
When you’re opting for a CHFA property purchase loan in Denver with a participating lender, you need to fulfill certain eligibility criteria, which may vary from one lender to another. Let’s look into the key aspects of a CHFA home purchase loan.
- A minimum or standard credit score of 620
- A borrower is eligible for closing cost and down payment assistance
- A CHFA homebuyer education course, both in online & offline mode
- Meet lender income limits, which vary according to property size and location
- A $1000 minimum financial contribution
- Above all, meet all the qualification parameters, as set by a CHFA participating lender
NOTE: Today’s (09.10.2023) mortgage rate in Denver CO for a 30-year fixed loan period is 7.60%, for 15 years is 6.85%, and for 5 years is 7.912% for an Adjustable Rate Mortgage (ARM).
How to Get Approved for a Mortgage Loan?
- Strengthen your credit score
- Be ready with a down payment
- Determine your overall budget
- Select the best mortgage options
- Compare the mortgage rates and terms
- Getting pre-approved for a mortgage loan
Colorado First-Time Home Buyer Programs
CHFA Home Purchase Loans – It is available through a CHFA participating lender, and comes with low or NO mortgage insurance, closing cost assistance, and a FREE homebuyer education course, in a one-to-one or online method.
CHFA Down Payment Assistance – This DPA assistance program provides borrowers with a 3% of the amount of the actual property price, for a 30-year CHFA mortgage loan. This assistance or grant does not have to be repaid.
This is all that you should know to qualify for a secured mortgage loan in Denver, and by partnering with a specialist home finance consultant or a registered mortgage broker in Colorado, it becomes easier for all borrowers.