First-Time Homebuyer Programs in Colorado Springs: What You Need to Know

Buying your first home can feel overwhelming, especially in Colorado Springs where prices are rising and the market can move quickly. Luckily, there are several first-time homebuyer programs designed to make homeownership more attainable. These programs can help with down payments, closing costs, and even favorable loan options. In this blog, we’ll break down the top programs and explain how to make them work for you.

Proposition 123 and Affordable Housing Support 🏠

Colorado is taking big steps to make homeownership and affordable housing more accessible. One of the main programs helping with this is funded by Proposition 123, which voters approved in November 2022. The measure allows the state to direct existing tax revenue toward supporting affordable housing projects across Colorado.

It’s important to note that individuals don’t apply directly for Proposition 123 funds. Instead, the funds are used to support specific programs, which you can apply for. Think of it as a behind-the-scenes boost that makes housing programs possible.

How the Funding Works

The money from Proposition 123 is split between two main state offices:

• 60% goes to the Office of Economic Development and International Trade (OEDIT), which manages the Affordable Housing Financing Fund in partnership with the Colorado Housing and Finance Authority (CHFA). This fund supports land banking, equity, and debt investments to advance affordable housing across the state.

• 40% goes to the Department of Local Affairs (DOLA) through its Division of Housing (DOH), which manages the Affordable Housing Support Fund. This fund helps support a variety of homeownership and homelessness programs.

Who Can Benefit?

Programs supported by Proposition 123 funds are designed to help affordable housing projects, not individuals directly. To qualify for support from the Affordable Housing Financing Fund, projects must be located in a jurisdiction that has completed a Proposition 123 Local Government Affordable Housing Commitment with DOLA’s Division of Housing.

💡 Pro tip: If you’re looking for ways to benefit from these programs as a homebuyer, your best bet is to explore local and state-supported homeownership programs—many of which are funded in part by Proposition 123.

📌 Learn more Proposition 123 here.

Colorado Housing and Finance Authority (CHFA)

CHFA is one of the most widely used programs for first-time buyers in Colorado. They offer:

• Down payment assistance in the form of grants or low-interest second loans.

• Flexible credit requirements for those who qualify.

• First-time and repeat buyer programs, depending on income and loan type.

💡 Pro tip: CHFA grants often don’t have to be repaid, making them an excellent way to reduce upfront costs.

📌 Learn more about CHFA programs here.

Pikes Peak Down Payment Assistance (DPA)

30-Year Fixed Rate Mortgage with Forgivable Down Payment Assistance

• DPA Details: 0% interest, 30-year deferred second mortgage.

• Amount Available: Up to 5% of your first mortgage for down payment and closing costs.

• Forgiveness Schedule: 

  • 50% forgiven within the first 5 years

  • Remaining 50% forgiven at the end of the 30-year term

   

Eligibility Requirements

1. First-Time Buyer: Not required!

2. Hometown Heroes: Must be employed full-time in a qualifying profession and receive the Pikes Peak DPA Mortgage.

   • Qualifying buyers in eligible professions (like teachers, first responders, healthcare workers) may receive:

     • Pikes Peak DPA first mortgage

     • Additional 1% of the loan amount for down payment assistance

    

3. Income Limits:

   • FHA, USDA-RD, VA: $174,440

   • Freddie Mac Conventional: $90,720

    

4. Minimum FICO Score:

   • FHA: 660

   • VA, USDA-RD, Freddie Mac Conventional: 640

    

5. Loan Limits:

   • FHA: $533,600

   • USDA-RD: $630,200

   • VA & Freddie Mac: $806,500

    

6. Property Location: Any home in El Paso County, including Colorado Springs

📌 Learn more about DPA program here.

Colorado Housing Assistance Corporation (CHAC)

Program Options

Immediate Payback

• Loan Amount: Up to 6% of sales price or appraised value (max $12,000)

• Repayment: Amortized over 360 months

• Interest Rate: 3%

• Fees: May include $5 monthly service fee, $100–$150 document prep, $200 commitment fee, $43 recording fee, $15 wiring fee, variable title fees

5-Year Deferred

• Loan Amount: Up to 6% of sales price or appraised value (max $12,000)

• Repayment: First 5 years 0% interest (no payments), next 25 years 5% interest

• Fees: Same as above

Disability Program

• Designed for persons with permanent disabilities or families with a child with a permanent disability

• Loan Amount: Maximum $10,000

• Interest Rate: 0%, APR 1%

• Term: 30 years, deferred until sale or transfer

• Fees: $250 commitment, $100–$150 document prep, $43 recording, $15 wiring, variable title fees

CHAC Program Requirements

• Household income eligibility includes all sources for all members

• Non-resident co-borrowers or co-signers are not permitted

• Property cannot have been tenant-occupied within 90 days prior to closing

• Sales price must be ≤ appraised value; limits may apply

• Borrowers must attend a First-Time Homebuyer Class and a Borrower Counseling Session prior to closing

• Home Inspections:

  • All health and safety issues must be resolved

  • Smoke and carbon monoxide detectors must be installed and functional

  • Homes built prior to 1978 require a lead-based paint inspection and must be certified “lead safe”

   

💡 Pro Tip: CHAC fees may be included in the loan amount or built into monthly payments, making it easier to manage upfront costs.

📌 Learn more about CHAC program here.

Employer-Assisted Homebuyer Tax Credit (HB23-1189)

Starting in 2024, Colorado employers can receive a state income tax credit for contributions made to employees’ home purchases. Key points include:

• Credit Amount: Employers can claim 5% of their contribution, capped at $5,000 per employee per year.

• Eligible Expenses: Contributions must be used for down payments and closing costs.

• Employee Contributions: Employees may also contribute, with the combined total subject to the credit cap.

For more information, refer to the official bill summary.

Additional Local Resources

• Pikes Peak Habitat for Humanity: Offers affordable homeownership opportunities for low-income families. Learn more at Pikes Peak Habitat for Humanity.

• Rocky Mountain Community Land Trust: Provides affordable housing options and homebuyer assistance programs. Visit Rocky Mountain Community Land Trust for more details.

FHA, VA, and Conventional Loans for First-Time Buyers

Even if you’re a first-time buyer, standard loan programs can be paired with assistance programs to make your purchase more affordable:

• FHA loans: low down payment, flexible credit.

• VA loans: zero down payment for veterans and active-duty service members.

• Conventional loans: competitive interest rates and potential PMI removal.

Tips for First-Time Buyers in Colorado Springs

• Start saving early and consider automatic transfers into a dedicated down payment account.

• Explore multiple programs and compare benefits before committing.

• Work with a local agent who knows which lenders offer the best first-time buyer incentives.

📌 Also read >>> [How to Afford a House in Colorado Springs]

Ready to take the first step toward homeownership? 🏡

If you’d like assistance in integrating these programs into your homebuying strategy or need guidance on eligibility and application processes, feel free to reach out!

📲 Contact me today for a free consultation to explore first-time buyer programs, check your eligibility, and start your home search in Colorado Springs.

Disclaimer: Programs, terms, and eligibility requirements can change. Always check with lenders, program administrators, or other qualified professionals for the most current information.

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