Wondering what Colorado Loan Programs options do you have?

If you’re in the market for a mortgage, you may wonder what loan programs are available to you. Every borrower has different qualifying factors and requirements. Whether you have 20% to put down on a home or nothing to put down, there are many loan programs available from mortgage lenders in Colorado.

Conventional Loans

Most lenders offer conventional loans. These are your straightforward loans for good credit borrowers. You need a 640 credit score, 36% debt-to-income ratio, and stable income to qualify. Conventional lenders require a 3% down payment for first-time buyers and 5% down for subsequent buyers.

If you qualify, you’ll get competitive interest rates and low closing costs. You’ll only pay Private Mortgage Insurance until you owe less than 80% of the home’s value, and you can accept gift funds to help you with the down payment.

FHA Loans

Only FHA-approved lenders can offer FHA loans. This government-backed loan is great for borrowers with less-than-perfect credit. It’s a natural alternative for those who don’t qualify for conventional financing.

You’ll need 3.5% for a down payment, but most borrowers can use gift funds to meet the requirement. Borrowers need at least a 580 credit score, a 43% debt-to-income ratio, and stable income/employment to qualify.

FHA loans offer competitive interest rates and closing costs too, but you’ll pay upfront mortgage insurance (1.75% of the loan amount) and annual mortgage insurance 0.85% of the outstanding balance for the life of the loan.

VA Loans

Only VA-approved lenders can offer VA loans. Don’t assume all mortgage lenders in Colorado can offer them. When you work with a VA-approved lender, you get beneficial rates and terms reserved just for veterans of the military, Reserves, or National Guard.

You don’t need a down payment for a VA loan and you need only a 620 credit score. The VA doesn’t require lenders to focus on the debt-to-income ratio either – they focus on your disposable income or money left after you pay your bills each month.

VA loans offer some of the most competitive interest rates and they limit the closing costs veterans can pay. VA loans don’t have mortgage insurance, but most veterans pay an upfront funding fee each time they take out a VA loan.

USDA Loans

Only USDA-approved lenders can offer USDA loans. Not all mortgage lenders in Colorado offer them. USDA loans are meant for low to moderate-income families who don’t qualify for any other financing.

USDA loans don’t require a down payment but do require a 640 credit score and a maximum 41% debt-to-income ratio. You can’t currently own a home to qualify for USDA financing and you’ll pay mortgage insurance for the life of the loan at a rate of 0.35% of the outstanding loan balance.

Final Thoughts

Mortgage lenders in Colorado offer many types of mortgage loans. Knowing what you need based on your qualifying factors and the amount of your down payment can help you decide which loan program is right for you.

If you’d like to explore your options for a mortgage, call me today. I’ll help you understand the various options, how they affect your loan, and help you decide which one is right for you.