Colorado First-Time Home Buyer Programs and Grants
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As a Colorado first-time home buyer, your biggest source of help is the Colorado Housing and Finance Authority (CHFA). It offers 30-year fixed loans paired with a down payment assistance grant of up to 3% of the first mortgage, or a deferred second mortgage of up to 4%, each capped at $25,000. You’ll need a 620 credit score, income under CHFA’s limits, a homebuyer education class and $1,000 of your own money. In Colorado Springs, El Paso County’s Pikes Peak Down Payment Assistance program adds up to 5% in forgivable assistance.
Herring Bank is a direct mortgage lender with a branch in Colorado Springs and offices in Texas and Oklahoma. We offer FHA, VA, conventional, USDA and jumbo loans. This guide explains each Colorado program, the 2026 income and price limits for El Paso County, how assistance pairs with each loan type, and the steps to apply.
Key Takeaways
- CHFA's DPA grant is up to the lesser of 3% of the first mortgage or $25,000 and doesn't have to be repaid. The second-mortgage option is up to 4% or $25,000, repaid when you sell, refinance or pay off the first mortgage.
- CHFA SmartStep (FHA, VA, USDA) and Preferred (conventional) don't require first-time buyer status. Income is capped at $178,920 of qualifying income statewide.
- CHFA FirstStep and FirstGeneration are for first-time buyers (no home owned in the past three years). In El Paso County, income limits start at $127,800 and the purchase price is capped at $566,730 outside targeted areas.
- First-generation buyers can get $25,000 regardless of loan size.
- Veterans near Fort Carson, Peterson and the Air Force Academy can combine a VA loan with CHFA SmartStep.
Buying in the Pikes Peak region? Talk to Herring Bank’s Colorado Springs mortgage team. 3110 N Nevada Ave, Colorado Springs. NMLS #415783 · Equal Housing Lender
Who Counts as a First-Time Buyer in Colorado
CHFA uses the standard federal definition: you’re a first-time homebuyer if you haven’t owned a home in the past three years. That means someone who sold a house in 2022 and has rented since can qualify again.
Three related labels matter:
- First-generation homebuyer (CHFA FirstGeneration): you’ve never owned a home and your parents or guardians never owned a home during your lifetime. People who lived in foster care only need to have never owned a home. With multiple borrowers, only one must be first-generation, but all must be first-time buyers.
- Qualified veterans can use FirstStep even if they’ve owned before.
- Targeted areas are designated census tracts where CHFA waives the first-time requirement for FirstStep and allows higher income and price limits.
Many of the best options don’t require first-time status at all. CHFA SmartStep and Preferred, FHA, VA and conventional loans are open to repeat buyers too.
CHFA Programs: SmartStep, Preferred, FirstStep and Down Payment Assistance
CHFA doesn’t lend directly. Its loans come through a network of CHFA Participating Lenders. Every program is a 30-year fixed-rate first mortgage, and the assistance is layered on top (CHFA program comparison, June 2026).
| CHFA program | Loan type | First-time buyer required? | Income limit | Purchase price limit | Assistance |
|---|---|---|---|---|---|
| SmartStep / SmartStep Plus | FHA, VA, USDA-RD | No | $178,920 qualifying income | None (loan max is the lower of $832,750 or the program limit) | Grant or second |
| Preferred / Preferred Plus | Conventional, up to 97% LTV / 105% CLTV | No | $178,920 qualifying income | None | Second only |
| FirstStep / FirstStep Plus | FHA only | Yes (or qualified veteran, or a targeted area) | County and household size (gross income) | Yes, by county | Second only |
| FirstGeneration / Plus | FHA only | Yes, and at least one borrower must be first-generation | County and household size (gross income) | Yes, by county | Second, $25,000 regardless of loan size |
CHFA down payment assistance
- DPA Grant: up to the lesser of $25,000 or 3% of the total first mortgage. No repayment. Example from CHFA: up to $6,000 on a $200,000 mortgage (CHFA DPA).
- DPA Second Mortgage: up to the lesser of $25,000 or 4% of the first mortgage. No monthly payment. Repaid in full when you pay off the first mortgage, sell, refinance or stop living in the home.
- Both can pay down payment, closing costs or prepaids, and neither counts against your debt-to-income ratio. CHFA notes that higher rates apply when you take assistance.
CHFA requirements that apply to every program
- Mid credit score of 620 or higher. Borrowers with no score may still qualify.
- Maximum DTI of 50% with a 620-659 score, or 55% with 660 or above
- A CHFA-approved homebuyer education class completed by each borrower before closing. Certificates are good for 12 months.
- A $1,000 minimum contribution from your own funds or a gift
- Owner-occupied, single living unit, and only one CHFA-financed property at a time
- FirstStep and FirstGeneration loans may be subject to IRS recapture tax if you sell within nine years at a gain and your income has risen above federal limits.
Colorado Springs and El Paso County Programs
El Paso County buyers have a local option alongside CHFA. In 2025 the El Paso County Housing Authority relaunched its long-running Turnkey Plus program as Pikes Peak Down Payment Assistance (PPDPA). According to the county’s 2025 housing report, it provides up to 5% fully forgivable down payment assistance, plus a limited-time “Hometown Heroes” 1% grant for educators, first responders, healthcare workers, and veterans and active military. The program covers homes anywhere in El Paso County, including the City of Colorado Springs, and is delivered through approved lenders.
Practical tips for Colorado Springs buyers:
- Ask each lender which programs it is approved for. CHFA and the county program both work only through participating lenders.
- CHFA allows other down payment programs to be layered with its loans if they qualify as a community second and sit in third lien position.
- Get preapproved with and without assistance. Assistance usually carries a higher first-mortgage rate, so with enough savings, skipping it can be cheaper over time.
Income and Purchase-Price Limits
CHFA’s limits took effect June 15, 2026 (CHFA income limits). SmartStep and Preferred use qualifying income, meaning only the income your lender uses to approve you. FirstStep and FirstGeneration use gross annual income for all borrowers, plus any spouse or partner who will live in the home.
| County | SmartStep / Preferred income | FirstStep income, 1-2 person (non-targeted / targeted) | FirstStep income, 3+ person (non-targeted / targeted) | FirstStep price limit (non-targeted / targeted) |
|---|---|---|---|---|
| El Paso (Colorado Springs) | $178,920 | $127,800 / $153,360 | $146,970 / $178,920 | $566,730 / $692,670 |
| Teller (Woodland Park) | $178,920 | $127,800 / $127,800 | $146,970 / $146,970 | $566,730 / $566,730 |
| Pueblo | $178,920 | $153,360 / $153,360 | $178,920 / $178,920 | $692,210 / $692,210 |
| Denver | $178,920 | $144,000 / $172,800 | $165,600 / $201,600 | $832,750 / $832,750 |
| Larimer (Fort Collins) | $178,920 | $130,400 / $156,480 | $149,960 / $182,560 | $664,190 / $811,790 |
CHFA’s Preferred Very Low Income Program has a separate, lower limit ($57,850 in El Paso County). FHA loan limits also apply. For 2026, FHA’s one-unit floor is $541,287 (HUD), and El Paso County’s limit is at or above that.
Worked example: a $425,000 home in Colorado Springs
Illustrative only: FHA loan through CHFA SmartStep with the DPA grant.
- Minimum FHA down payment (3.5%): $14,875
- Base loan $410,125. With the 1.75% upfront MIP financed, the total first mortgage is about $417,302.
- CHFA grant at 3% of the total first mortgage: about $12,519, leaving about $2,356 of the down payment, more than the $1,000 minimum, from your own funds or a gift
- Principal and interest at an illustrative 6.50%: about $2,638 a month, plus about $191 a month of annual MIP at 0.55%
- Add property tax (relatively low in El Paso County, roughly 0.5% of value or about $177 a month) and homeowner’s insurance. Get a hail-inclusive quote early.
Model your own numbers with Herring’s affordability calculator.
Want to know what you qualify for? Get a mortgage in Colorado with Herring Bank. Our local team will compare FHA, VA and conventional options, with and without assistance. NMLS #415783 · Equal Housing Lender
Pairing Assistance With FHA, VA, USDA or Conventional Loans
| Loan | Minimum down | Typical credit floor | Pairs with | Good fit if |
|---|---|---|---|---|
| FHA | 3.5% (580+), 10% (500-579) | CHFA requires 620 | SmartStep, FirstStep, FirstGeneration, PPDPA | Moderate credit, small savings |
| VA | $0 with full entitlement | No VA minimum (lenders set one). CHFA requires 620. | SmartStep | Eligible veterans and service members |
| USDA | $0 | CHFA requires 620 | SmartStep | Homes in USDA-eligible rural areas and income-eligible buyers |
| Conventional | 3% (first-time buyer), 5% otherwise | CHFA requires 620 | Preferred (second only) | Good credit. PMI can be canceled later. |
Herring offers FHA home loans with 3.5% down. Our FHA page notes that certain down payment assistance programs can be used with FHA, and our loan officers can tell you which ones fit your file.
Military Buyers Near Fort Carson, Peterson and the Air Force Academy
Colorado Springs has one of the country’s largest military communities: Fort Carson, Peterson and Schriever Space Force Bases, the U.S. Air Force Academy and Cheyenne Mountain. For most service members and veterans, the VA loan is the strongest first-time option:
- No down payment and no monthly mortgage insurance
- Funding fee of 2.15% on first use with less than 5% down, 1.5% with 5% down and 1.25% with 10% down (VA.gov). Veterans receiving VA disability compensation are generally exempt.
- CHFA SmartStep accepts VA loans, so assistance can cover closing costs and prepaids.
- PCS orders? Fannie Mae treats an active-duty borrower who is temporarily away from the home on military orders as an owner-occupant. Ask early if you’ll close remotely or be away when the loan closes.
Colorado also exempts 50% of the first $200,000 of actual value from property tax for qualifying veterans with a 100% permanent and total disability rating. See our guide to the Colorado veterans property tax exemption, and start with Herring’s Colorado Springs VA loans page.
How to Apply, Step by Step
- Check your credit. Aim for a 620 mid-score for CHFA. If you’re below that, our guide on how to buy a house with bad credit covers quick fixes.
- Take a homebuyer education class through a CHFA-approved provider (online or in person). Each borrower must complete it individually.
- Estimate your income for the program you want. Use qualifying income for SmartStep and Preferred, or gross household income for FirstStep and FirstGeneration, and compare it with the El Paso County limits above.
- Get preapproved with a lender approved for the programs you want. Compare a no-assistance quote as well.
- Shop within the price limit if you’re using FirstStep or FirstGeneration. Check whether the home is in a targeted census tract.
- Make an offer and budget for the $1,000 minimum contribution, inspection, appraisal and earnest money.
- Close. The DPA funds at closing alongside your first mortgage.
Free housing counseling is also available through HUD-approved agencies. Find one at hud.gov/findacounselor. For the full Colorado mortgage process, see how to get a mortgage in Colorado.
Frequently Asked Questions
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This article is for educational purposes only and does not constitute financial, legal, or tax advice. It is not a commitment to lend. Loan programs, rates, and eligibility requirements are subject to change without notice. Consult a qualified professional before making financial decisions.
