Colorado Loan Programs That Work With Down Payment Assistance
Choosing the right mortgage is about more than the interest rate. Your loan type affects how much you need upfront, your monthly payment, and whether you’ll pay mortgage insurance or other fees. On this page, we break down the most common home loan programs used by Colorado buyers – Conventional, FHA, VA, and USDA – and how they often work with Colorado Down Payment Assistance.
Quick Comparison of Colorado Loan Programs
Use this quick comparison to understand the most common loan types Colorado buyers use. The best choice depends on your credit, income, cash-to-close, property type, and whether you’re using down payment assistance (DPA).
Down payment minimums depend on guidelines and borrower qualifications-but as general reference:
FHA loans can allow down payments as low as 3.5% and some conventional programs can allow 3% down for qualified buyers.
If you’re eligible, VA purchase loans often offer no down payment (as long as the sales price isn’t higher than then home’s appraised value).
For eligible rural areas, USDA’s guaranteed loan programs states eligible applicants may purchase in an eligible rural area with 100% financing.
| Loan program | Down payment (as low as) | Mortgage insurance / fees | Best for | Works with Colorado DPA? |
|---|---|---|---|---|
| Conventional | 3% (some programs) | PMI typically if < 20% down | Strong credit, flexibility | Often (program-specific) |
| FHA | 3.5% (qualified borrowers) | FHA mortgage insurance applies | Lower down payment, flexible guidelines | Often (program-specific) |
| VA | 0% (if eligible) | VA funding fee may apply | Veterans & eligible spouses | Sometimes helpful |
| USDA | 0% (eligible rural areas) | USDA guarantee fees apply | Rural-eligible areas + income rules | Often (program-specific) |
Note: Down payment minimums and eligibility depend on loan guidelines and underwriting. We’ll confirm the best fit based on your credit, income, location, and property type.
Conventional Loans in Colorado
A conventional loan is a mortgage that isn’t tied to a government program. Many Colorado buyers choose conventional when they have solid credit and want flexible options.
3% down conventional options: Some qualified buyers may be eligible for low down payment conventional programs like Fannie Mae HomeReady (as low as 3% down) or Freddie Mac Home Possible (3% down)(program rules apply
When conventional is a great fit:
- You want competitive pricing and strong long – term flexibility
- You’re comfortable with a smaller down payment (sometimes 3% down programs may apply)
- You want a path where mortgage insurance may be removable later depending on your loan structure.
Common Conventional Scenarios
- First-time buyers using 3% down options (if eligible)
- Buyers combining conventional financing with eligible assistance or gift funds (program-specific)
FHA Loans in Colorado
FHA loans are common options for Colorado buyers who want a smaller down payment and a more flexible path to approval. FHA can be especially helpful when you’re balancing saving for a down payment while also covering closing costs.
FHA can be a strong fit if
- You want a lower down payment option
- You’re building or rebuilding credit
- You want a structured, widely available loan program
What to watch for
- FHA mortgage insurance is part of the FHA structure and affects your monthly payment
- The best loan choice depends on your down payment, credit, and long – term plan
The CFPB notes that FHA loan can allow down payments as low as 3.5%, and may allow lower credit scores than most conventional loans (guidelines apply).
VA Home Loan PROGRAMS in Colorado
If you’re eligible, VA loans can be one of the strongest options because they often allow a low-or no-down-payment options and are designed for veterans, service members, and eligible spouses.
VA is often ideal when
- You qualify for VA eligibility
- You want a low upfront – cash path to homeownership
- You want to minimize monthly mortgage insurance type costs (VA has its own fee structure)
USDA Loan PROGAMS in Colorado
USDA loans are designed for eligible buyers purchasing in qualified rural areas and can offer a low-down-payment path (area and income rules apply). Many buyers are surprised that “USDA areas” can include locations outside major city centers.
USDA can be a great fit if
- Your target property is in an eligible area
- Household income fits program guidelines
- You want a low-upfront-cash option
USDA’s Single Family Housing Guaranteed Loan Program states eligible applicants may purchase in an eligible rural area with 100% financing (rule apply).
You can also check area/income eligibility using USDA’s official eligibility site.
Frequently Asked Questions
Which loan program is best for first-time buyers in Colorado?
It depends on credit, savings, income, and whether you’re using down payment assistance. We compare monthly payments + cash-to-close to find the best fit.
Can I buy a home in Colorado with 3% down?
Some qualified buyers may be eligible for certain conventional options that allow 3% down (program rules apply).
Is FHA better than Conventional?
Not always. FHA can be easier with smaller down payments or rebuilding credit, while conventional can be a better long-term cost fit for stronger credit profiles.
Can I use down payment assistance with FHA?
Often yes, but it’s program-specific and lender-specific.
Can I use down payment assistance with Conventional?
Often yes, depending on the assistance program guidelines and how the loan is structured.
Do VA loans require mortgage insurance?
VA loans typically don’t have monthly mortgage insurance, but they may include a funding fee depending on your scenario.
Do USDA loans require a down payment?
USDA can offer 0% down financing for qualified buyers in eligible areas (area/income rules apply).
What credit score do I need?
It varies by loan program, lender, and assistance program. The best move it’s to match your current score range to the right strategy.
Can down payment assistance cover closing cost too?
Sometimes yes, depending on the program.
How do I start?
Start with a quick call or an eligibility check so we can match the best loan + assistance path for your city/county.
How Colorado down payment assistance works with loan program
Down payment assistance can come in different forms – commonly a grant (no repayment) or a second mortgage (repayment or deferred until a future event, depending on the program). The right match depends on your loan type (FHA, Conventional, VA, USDA), your location (city/county), and your income/credit profile.
To match you correctly, we typically need:
- City/county you’re buying in
- Estimated household income
- Estimated credit score range
- Target price range
- Timeline (0-3 months / 3-6 months / 6-12 months)
Franz Sarangaya
Mortgage Loan Officer NMLS# 2624915
Forge Home Lending empowers aspiring homeowners to build generational wealth through real estate. With transparency and innovative solutions, we simplify the path to homeownership.
Reviewed by: Franz Sarangaya, Mortage Loan Officer (NMLS #2624915)
Last Updated: January 2026
Disclaimer: This page is for educational purposes only. Loan program guidelines and assistance options can change. Final eligibility depend on underwriting and program requirements.