Conventional Loans Colorado
Conventional loans offer a flexible and approachable homeownership route for people who dream of owning a house amidst breathtaking Colorado scenery. District Lending can help you find the best conventional mortgages that balance affordability and flexibility.
Explore Colorado’s varied realm of conventional loans, where you can easily access both frenetic urban living and scenic mountain getaways. These mortgages, which are not insured by any government entity, provide access to a range of real estate, whether you want a primary residence, a holiday home, or an investment property.
Moreover, the 2024 conforming loan limits of $766,550 let you purchase a typical home in Denver County, priced at $600,000, or a house in El Paso County, where the median price is $450,000.
Conventional Loans in Colorado
Conventional loans in the Centennial State follow the rules set by Fannie Mae or Freddie Mac, entities that make up the Federal Housing Finance Agency. However, unlike USDA, FHA, and VA loans, the federal government does not insure conventional mortgages. This is why they’re riskier for lenders and come with harsher requirements.
Still, as the average home in Colorado reached $526,779 this year, with the typical home only staying on the market for 30 days, conventional financing is the best way to purchase a home for most Coloradans — it’s more flexible with loan amounts, property types, and typically faster closing times.
Colorado Conventional Loan Requirements
In Colorado, the conditions for a conventional loan are strict yet achievable. A solid employment history, a manageable debt-to-income ratio, and a credit score of at least 620 are the most important requirements. However, as they're provided by private lenders and credit unions, conventional mortgages also have requirements that vary by lender.
Down Payment
A conventional home loan typically requires a minimum down payment of 3% to at least 5%, while typically, down payments for a primary residence range between 10% and 20%. The median in Colorado is $66,062.
A bigger down payment means more home equity, lower monthly payments, lower private mortgage insurance (PMI), and a better interest rate. In order to satisfy down payment requirements, Colorado homebuyers might investigate a variety of assistance programs from different organizations:
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Community Resources and Housing Development Corporation (CRHDC)
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Colorado Housing Assistance Corporation (CHAC)
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Colorado Housing Finance Association
Colorado also has plenty of city-level and county-level payment assistance programs. However, many of these programs have strict qualification criteria, so the quickest way to qualify for one of them is to talk to your District Lending loan officer, who has plenty of experience with these programs.
On the other hand, down payments for investment properties or second homes tend to be higher, as these are riskier for lenders compared to primary residences, and they often have higher mortgage rates.
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Private Mortgage Insurance
For a conventional loan with less than a 20% down payment, private mortgage insurance is required. You can ask to have the PMI removed if you have 20% equity in your house, which might lower your monthly payment and total loan costs. Because of this, conventional mortgages can be a good choice for people with a sound financial plan but not enough cash. Remember that conventional mortgage insurance can be canceled with enough equity, but that is not the case with FHA mortgage insurance.
Interest Rates
Interest rates for loans in Colorado are determined by the loan amount, credit ratings, and the state of the market. To accommodate varying financial circumstances, there are various fixed-rate mortgages and adjustable-rate mortgages available in Colorado.
Fixed-rate loans provide stability by fixing your interest rate for the duration of the loan, making them the best choice for people who want to become long-term homeowners. On the other hand, adjustable-rate mortgages (ARMs) have lower interest rates in the initial period that could fluctuate over time in response to market conditions. ARMs may be a good option for people planning to relocate or refinance within a few years.
Credit Score
Your credit score has a significant impact on whether or not you can get a conventional loan. You can get better loan conditions and interest rates if you score higher. Lenders often need applicants to have a minimum credit score of 620, but getting a score in the upper 600s or above can significantly increase their chances of getting approved and result in cheaper interest rates. This should be no issue for the average Coloradan, as their credit score would be 731.
Colorado Conventional Loan Limits
In most Colorado counties as of 2024, the maximum loan amount for a single-family residence under a conventional loan is $766,550. However, some counties have a higher conforming loan ceiling:
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Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Gilpin, Jefferson, Park, and Elbert counties – $816,500
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Boulder County – $856,750
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Eagle, Garfield, and Pitkin counties – $1,149,825
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Routt County – $1,012,000
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San Miguel County – $994,750
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Summit County – $1,006,250
According to the guidelines set by the FHFA, the limits are higher for properties with two, three, and four units, going as high as $2,211,600 for a four-unit property in Pitkin and Garfield counties. To calculate your expenses and choose between different types of mortgages, it’s best to consult your District Lending loan officer. They will review your finances and help you decide between mortgage and interest rate types.
Conforming Loan Versus Non-Conforming Loan
Both conforming and non-conforming loans are available in Colorado. Conforming loans follow all rules set forth by Fannie Mae and Freddie Mac, including maximum conventional loan amounts. These limits are exceeded by jumbo loans, also known as non-conforming conventional loans, which are designed for higher-priced residences.
Because conforming loans follow the rules and loan limitations set by Fannie Mae and Freddie, they are more easily obtained and more widely available to borrowers. On the other hand, jumbo loans are the best option for people buying luxury real estate or houses in high-cost neighborhoods.
This is essential for locations like Aspen or Vail, but they also frequently have tougher credit standards and require large cash reserves. Other types of non-conforming loans are government loans such as VA, USDA, and FHA loans.
Closing Costs
In Colorado, closing costs typically represent 2% to 5% of the loan amount. Depending on the loan type and the property, these expenses can include title insurance, appraisal fees, and lender fees. Buyers should also budget for other costs, including origination fees, credit report fees, and perhaps discount points — upfront payments used to lower the mortgage rate. Budgeting for these costs is crucial for Colorado homebuyers because they can significantly raise the overall cost of the mortgage.
Personal Finances
Applying for a conventional mortgage in Colorado requires you to have good personal money management. This includes a stable job history, regular income, a good credit score, no foreclosures or bankruptcies, and a solid debt-to-income ratio, typically 43%. The main goal of examining borrowers’ personal finances is to ensure they can afford their monthly payments to prevent lenders from losing money.
Contact District Lending Today
Contact District Lending Today to start preparing for your dream home in Colorado. We will help you understand tax returns, analyze credit scores, or explore fixed-rate and adjustable-rate mortgage options.
District Lending provides a personalized, dedicated approach to help you find the right loan type. We can help you find the right conforming or non-conforming conventional loan, but our loan officers also have access to a wide VA, USDA, and FHA loan landscape. Contact us today for a free quote.
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