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Down Payment Assistance: Not Just for First-Time Homebuyers

Posted by Susanna Haynie on September 4, 2020
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home down payment assistanceWhen the housing market took a major hit in 2008-2009, many families lost their homes and returned to renting or living with friends and family. Now that the housing market is looking robust again, many are eager to purchase. But what if you do not have several thousand dollars for a down payment or closing costs? Can you still purchase a home? Even with several options for down payments from 3%-5% down, people are struggling to come up with funds for a down payment. Luckily, there are several programs that provide assistance for down payments and other costs of purchasing a home and they not as difficult to qualify for as many assume.

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To bring you updated information on what is possible in Colorado, we sat down with loan originator, Sheila Endres (719.339.4664), who specializes in working with individuals and families who need a little extra attention in accessing the right funding for their homes. We asked her what was available in Down Payment Assistance programs.

QUALIFICATIONShome down payment assistance

First of all, who qualifies for Down Payment Assistance? Here are the basic requirements:

  1. Credit score of 640 or above. There may be individual programs that will go below that, but the general rule is that you need to maintain a credit score of 640 and up. Is your score not quite there? Don’t worry. Find a good loan originator to work with, and they can help you make a plan to get your credit score up in as little as 2-6 months.
  2. $1000 of personal money.  Any assistance program wants you to have a little “skin in the game” so you will need to save up at least $1000. With some programs that money can be a gift from someone else, but for other programs the funds must be your own.
  3. Home Education Class. Some programs require that you take a Home Education Class. The classes are provided in every county and are free if you attend in-person. Classes are available online for a fee of $100.
  4. Income Limits. Each program will have income limits. Generally, if you make more than $80,000/yr., you may not qualify. However, check with a loan originator for specifics before you disqualify yourself.
  5. First-time Buyer or have not owned a home in at least three years. If you have owned a home within the last three years, you will have to wait until that time deadline has expired. In the meantime, use that time to save and plan for your home purchase.
  6. Bankruptcy must be 2-4 years past.
  7. Two-year work history. Does not have to be with the same company, but must be in the same industry.

Related Reading:
First Time Home Buyers Down Payment Savings Account
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Sheila shared that many people have a few misconceptions about Down Payment Assistance.

  • Myth #1: You need to be a first-time home buyer. No. You don’t have to be a first-time home buyer. This is great news with a qualifier: as long as it has been at least three years since you last owned a home, you can apply.
  • Myth #2: The funds are strictly for a down payment. Actually, it can be used for anything involved with the purchase of your home such as closing costs. A more appropriate term would be “mortgage assistance”.
  • Myth #3: DPA is free money.  Unfortunately, this is not true in most cases*. Any monies received for down payment assistance are actually rolled into the cost of the home. Most DPA programs find creative ways to get the money repaid. For example, the CHAC program creates a second mortgage that is paid back $50/month. Keep in mind this will increase your monthly payments and impact your debt to income ratio. The CHFA program requires that you use their lenders and they receive their money back by increasing your interest rate. Either way, make sure to ask your lender all the details of the program they recommend and how it will impact your home purchase. *Some programs state that the money is “grant” money and doesn’t have to be paid back. Actually, while there is no “loan”, they receive their money by increasing your interest rate on the mortgage. Always double check to see if the grant you are looking at impacts your loan interest rate.

Related Reading: Steps to Buy a Home


CHAC – Colorado Housing Assistance Corp: “CHAC provides low-interest, flexible loans to low and moderate (80% AMI) income first-time home buyers for down payment and closing cost assistance throughout Colorado. The loan is recorded as a second mortgage, (lien), on the property being purchased. All of the loans require repayments, usually monthly, although the start date of those payments may vary. All borrowers are required to have a minimum contribution to the transaction, $1,000. That cannot be a gift. (Minimum for the disability program is $750.00) Other exceptions may apply.”


  • Grant funds up to 5% of your loan amount are available to Colorado residents to be applied toward down payment and closing costs of a Primary Residence
  • Grants require no repayment
  • No First Time Home Buyer requirement
  • Income limits apply, but most applicants qualify – Conventional, FHA, VA and USDA Mortgages available

CHFA – Multiple options for down payment grants, assistance with closing costs, and mortgage loans.

EL PASO COUNTY TURNKEY“The El Paso County, Colorado “Turnkey” Mortgage Origination Program provides a competitive 30-year fixed-rate mortgage with a down payment assistance (DPA) grant equal to 4% of the mortgage amount to qualifying low and moderate income homebuyer families throughout El Paso County, including the City of Colorado Springs.”

There are additional programs but the ones listed above are the most popular. Be encouraged that if you want to become a home owner but fall a little short of the basic requirements, there are ways to prepare that can get you ready in as little as 2-6 months. Basically, work on getting your credit score up, save $1000, get in touch with a compassionate loan originator such as Sheila, and then you are ready to enjoy the benefits of home ownership.

Have more questions? Give us a call 719-219-9739 or email susanna@co-regroup.com. Click the picture below to get a complimentary copy of our Home Buyer Guide.

Click here to download your free home buyer guide


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