Colorado home financing overview
A low down payment can mean 0%, 3%, 3.5%, or 5% depending on the borrower, property, occupancy, location, income, credit, and loan program. This page is the comparison hub. Use it to review the main options side by side, then open the detailed guide for any program that appears to fit.
Potential 0% down
VA or USDA for eligible borrowers and properties
Potential 3% down
Several eligible conventional paths
Potential 3.5% down
FHA for an eligible borrower
Cash assistance
Grants or second mortgages may help when eligible
A smaller down payment can preserve reserves, while a larger down payment can reduce the loan amount and mortgage insurance. The better choice depends on payment, cash to close, rate, insurance, credits, assistance, property eligibility, and the money left after closing.
Schedule a Comparison Start a Secure PreapprovalThe minimum down payment is only one eligibility feature. The table below summarizes the major purchase options, but a lender must confirm current agency, insurer, investor, property, and lender requirements for the actual transaction.
| Program | Potential minimum down payment | Who it may fit | Main limits or tradeoffs | Detailed resource |
|---|---|---|---|---|
| Fannie Mae HomeReady | 3% for an eligible one-unit purchase | Income-qualified first-time or repeat buyer purchasing a primary residence | Qualifying income generally cannot exceed 80% of AMI; PMI and education requirements may apply | HomeReady guide and AMI tool |
| Freddie Mac Home Possible | 3% for an eligible one-unit purchase | Income-qualified first-time or repeat buyer purchasing a primary residence | Qualifying income cannot exceed 80% of AMI; PMI, property, and education requirements may apply | Home Possible guide and eligibility map |
| Fannie Mae Standard 97% LTV | 3% for an eligible purchase | A qualifying purchase with at least one first-time homebuyer | Primary-residence, property, underwriting, and PMI requirements apply | Conventional loan guide |
| Freddie Mac HomeOne | 3% for an eligible purchase | Qualified first-time homebuyers purchasing an eligible one-unit primary residence | First-time-buyer, property, underwriting, and PMI requirements apply | Conventional loan guide |
| FHA | 3.5% for an eligible borrower | A primary-residence buyer who may benefit from FHA credit or debt-to-income flexibility | Upfront and annual mortgage insurance, county loan limits, appraisal, and property standards apply | FHA vs. conventional comparison |
| VA | Potentially 0% | Eligible veterans, service members, and qualifying surviving spouses buying a primary residence | Eligibility, entitlement, occupancy, appraisal, lender approval, and a possible funding fee apply; no monthly PMI | Colorado VA loan guide |
| USDA Guaranteed | Potentially 0% | Income-qualified buyers purchasing an eligible primary residence in a USDA-eligible area | Household-income, location, property, guarantee-fee, and lender requirements apply | Official USDA program page |
| CHFA or other assistance | Depends on the first mortgage and assistance structure | Eligible buyers who need help with down payment or closing costs | Income, education, participating-lender, rate, repayment, sale, and refinance terms can apply | Colorado assistance guide |
Several conventional programs can reach 97% loan-to-value for an eligible purchase, but their borrower requirements are not identical.
HomeReady and Home Possible are not interchangeable. One agency’s automated underwriting, income treatment, property findings, mortgage-insurance quote, or lender pricing may produce a better result for a particular file. A qualifying borrower should generally have both paths tested.
3.5% potential minimum
FHA can be useful when credit, debt-to-income ratio, or cash creates challenges for conventional approval. Compare the financed upfront premium, monthly mortgage insurance, property requirements, and future refinance assumptions.
Compare FHA with conventional financing0% may be available
VA financing can provide exceptional value for an eligible borrower, including a possible no-down-payment purchase and no monthly private mortgage insurance. Entitlement, occupancy, residual income, appraisal, funding fee, and lender approval still matter.
Review Colorado VA loans0% may be available
USDA Guaranteed financing can provide 100% financing for an eligible primary residence in a qualifying area when household income, property, underwriting, and lender requirements are met.
Review the official USDA programAssistance may come through a grant, deferred second mortgage, repayable second mortgage, employer benefit, local program, or other eligible source. The assistance does not replace the first mortgage. Both loans and every source of funds must work together.
Before accepting assistance, compare:
Use the Colorado down payment assistance guide for the full comparison.
| Structure | Down payment | Approximate base loan | Insurance consideration |
|---|---|---|---|
| 3% conventional | $15,000 | $485,000 | PMI generally applies |
| 3.5% FHA | $17,500 | $482,500 before any financed upfront premium | Upfront and annual FHA mortgage insurance generally apply |
| 5% conventional | $25,000 | $475,000 | PMI generally applies |
| 10% conventional | $50,000 | $450,000 | PMI generally applies, often at a lower cost than with less down |
| 20% conventional | $100,000 | $400,000 | Borrower-paid PMI generally is not required in a standard structure |
The example does not include closing costs, prepaid interest, taxes, homeowners insurance, escrow deposits, association dues, rate, points, lender credits, seller credits, or assistance. Those items can materially change both the payment and cash required at closing.
Cash to close can include the down payment, lender and third-party closing costs, prepaid interest, tax and insurance deposits, inspection expenses, appraisal costs, and purchase-contract adjustments. A buyer may be able to reduce those amounts through eligible:
Each option has rules. A seller credit cannot exceed eligible charges or become prohibited cash back. A lender credit generally comes through different rate pricing. Assistance can create a second lien or future repayment obligation. A gift must come from an eligible donor and be properly documented.
Twenty percent down can eliminate borrower-paid PMI in a standard conventional structure, but it can also leave a new homeowner short of reserves. Compare the monthly savings with the security and flexibility of keeping cash after closing.
No. HomeReady is one specific Fannie Mae program. This page compares the broader field, including HomeReady, Home Possible, standard 3% conventional, FHA, VA, USDA, and assistance.
Not for every option. HomeReady and Home Possible can serve eligible repeat buyers, while standard 97% conventional and HomeOne generally include first-time-buyer requirements for a purchase. FHA, VA, and USDA have their own eligibility standards.
No. Five percent down can reduce the loan amount and may improve pricing or PMI, but it also uses more cash. Compare the payment, cash to close, reserves, and expected ownership period.
Potentially. The maximum and eligible uses depend on the loan program, occupancy, loan-to-value ratio, contract, appraisal, and final charges.
Potentially. The first mortgage, assistance provider, lender, income limits, property, education, subordinate lien, payment, and repayment terms must all permit the structure.
There is no universal answer. Rate, loan amount, mortgage insurance, taxes, homeowners insurance, association dues, assistance payments, and lender pricing all affect the result.
See the payment, mortgage insurance, cash to close, credits, assistance, and reserves for the programs that fit your borrower and property profile.
Schedule a Consultation Start a Secure PreapprovalMichael Shotnik
Broker | Owner, Milestone Home Mortgage
NMLS 218281
303-800-4595
This page is for general educational purposes and is not a rate quote, mortgage approval, commitment to lend, financial advice, tax advice, or legal advice. Minimum down payments, income limits, first-time-buyer definitions, mortgage insurance, fees, assistance, credits, property rules, and lender requirements vary and can change. All financing is subject to borrower, credit, income, asset, property, appraisal, title, insurance, lender, agency, insurer, and investor approval. Not all applicants or properties will qualify.
Updated August 31, 2026
Builder mortgage incentives in Colorado can create real value, but the advertised rate or credit is only one part of the transaction. A builder may offer a permanent rate buydown, a temporary buydown, closing-cost assistance, a price reduction, design-center upgrades, or a combination ...
Michael and Melissa are always a pleasure to work with. They are extremely responsive, professional and work hard to get the best loan for us. I would recommend Colorado Mortgage to anyone. Thank you for another great experience!
Milestone Home Mortgage LLC NMLS #2588937. Michael Shotnik NMLS: 218281, CO License: 100017466. Not licensed in Alaska or New York. To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.
