Colorado Down Payment Assistance FAQ
First time homebuyer requirements, credit, income, and program options explained

​Do You Have to Be a First-Time Homebuyer?

You do not need to be a first-time homebuyer to qualify for Colorado down payment assistance. That said, if you haven’t owned a home in the last three years, you may have access to additional programs and benefits.

 

How Much Do I Need for a Down Payment With a First-Time Homebuyer Program?

In some cases, as little as $1,000 out of pocket. With these programs, buyers may receive assistance up to $25,000, which can cover most or all of the required down payment. Many buyers assume they need 20% down, but most first-time buyers in Colorado put down far less.

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Do I have to pay the assistance back?

There are two main programs:

3% Grant - This does not require repayment

4% Silent Second- This does require repayment but has no interest rate and it does not need to be paid until the end of the 30 year loan term. 

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Do I Need Two Years at the Same Job?

No. Lenders typically require a two-year employment history, but that does not mean you must be with the same employer for two years. Job changes are acceptable, especially within the same industry or if income has improved. Stability matters more than perfection.

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Can I qualify with SSI or Disability Income?

Yes. SSI and disability income can be used to qualify for a mortgage, as long as the income is stable and properly documented.

Lenders treat disability income like other qualifying income sources, provided it is expected to continue. In some cases, we may even be able to “gross up” non-taxable income, which can increase your qualifying amount.

There are also certain programs designed to support buyers with disabilities, depending on eligibility and property location.

If your income alone does not qualify, adding a co-signer may help strengthen the application. 

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What are the income requirements?

Programs use your gross monthly income when calculating household income.

Statewide Income Limit(all counties)

• $174,440

Metro Area Income Limit(See eligible metro counties)

• $210,150

What does this mean? Your total household income cannot exceed the maximum income limit for the county and program that you are applying for. There are programs such as the Hero Program that don't have income limits. 

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Can You Use Funds From Your 401k as a Down Payment?

Yes, you can use funds from your 401k for a down payment.

However, every 401k plan is different. Some allow loans against the balance, while others allow withdrawals with penalties.

Before using retirement funds, it is important to:

• Understand tax implications

• Review employer plan rules

 

Can You Buy a Home With Poor Credit?

Yes, it is possible. Most programs require a minimum credit score of around 620, though some FHA and assistance programs may allow scores as low as 600, depending on the full financial profile.

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If your score is below the requirement, we can often create a plan to improve it. Small adjustments, like reducing credit card balances or correcting reporting errors, can sometimes make a meaningful difference within a few months.

Credit does not have to be perfect to buy a home.

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​What Is the Hero Program?

The Hero Program is designed for community professionals such as:

• Teachers

• Healthcare workers

• First responders

• Law enforcement

• Military members

This program may offer:

• 1% lender credit toward closing costs or rate buy-down

• Down payment assistance options

• Specialized structuring for qualifying professions

It is designed to help essential workers purchase homes with less upfront cash.

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​How Much House Can I Afford?

The amount you can afford depends on:

• Your gross monthly income

• Your credit score

• Your debt-to-income ratio (DTI)

• Your down payment

• Current interest rates

A common guideline is to keep your housing payment under 45% of your gross income, though actual loan approvals are based on full underwriting guidelines.

The best way to know for sure is to run a personalized scenario.

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What Is the Next Step?

The best first step is reviewing your specific financial picture.

Every program has nuances, and qualification depends on the full scenario — income, credit, property location, and assistance program selected.

If you want to see what you qualify for and how little you may need out of pocket, you can request a personalized review.

Visit: Colorado DPA and complete the inquiry form to get started! 

 

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