Longmont, CO – First Time Home Buyer
In the market to buy your first home? Our Longmont first time home buyer mortgage loans can help you obtain the financing you need to purchase the home you desire. Our programs offer very competitive terms, including the lowest down payment options for FHA and conventional loans. We also offer unique home buyer mortgages, including no down payment loans for rural properties, and jumbo loans for large or luxury homes. We have programs to meet almost any type of borrowers home financing needs.
Longmont Colorado First Time Home Buyer Programs:
We have several options for first time home buyers. Depending on your situation, and what your needs are, we will recommend what is the most fitting and beneficial home loan for you. Our home purchase loans include everything from low down payment programs to 100% financing for those who qualify. We encourage you to take the time to speak with one of our home loan specialists who will be able to answer all of your questions, and provide you with recommendations for what would be the best home mortgage for you.
- FHA Loans for First Time Home Buyers
- Conventional Loans for First Time Home Buyers
- USDA Loans for First Time Home Buyers
- VA Loans for First Time Home Buyers
- Jumbo Loans for First Time Home Buyers
The above 5 loan types are the primary loan program options that exist. Other than much less common programs such as reverse mortgages (for seniors), and hard money loans (we do not offer these), the above 5 are your only first time home buyer loan options.
Below you can read about each of the 5 first time home buyer programs available to learn about the requirements, who each type of loan is best for, and advantages of each mortgage type. We are here to help you and answer any questions that you may have. If you would like to request a free consultation, please do so. We would love to hear from you.
If you would like to learn about down payment assistance programs in Longmont, click here to jump down on the page to view this information. We also included some frequently asked questions and answers about buying your first home.
FHA Loans for First Time Home Buyers
FHA loans are highly recommended for first time home buyers due to the relatively easy requirements to get approved and the low down payment option. The requirements to qualify for a FHA loan are:
- Down Payment – FHA loans require a 3.5% down payment.
- Credit Score – 620 credit score or higher (some other FHA lenders might allow a 580).
- Pay Stubs – When you apply, you must submit your two most recent pay stubs.
- Tax Returns – You must also provide two years of tax returns. 2 years of consistent employment is required.
- DTI Ratio – Your mortgage payment must not exceed 31% of your monthly income. Also, your total debts, which includes auto loans, credit cards, and other debts which show on your credit report and require monthly payments, must not combined exceed 43% of your income. If your debt-to-income ratio exceeds these amounts, you may still qualify with “compensating factors”.
- Mortgage Insurance – All FHA loans require upfront mortgage insurance and monthly insurance premiums (MIP). You can use our FHA mortgage calculator with MIP to see how much mortgage insurance costs based upon your desired loan amount. It will also calculate inputted taxes and homeowners insurance so you can see the total expected payment amount.
- No Bankruptcies – If you have had a bankruptcy in the last 3 years you will be disqualified for FHA financing, unless the bankruptcy was due to what is called an “extenuating circumstance” such as job loss or medical emergencies. The program you may be eligible for if you are within 3 years of a bankruptcy, but it was due to an extenuating circumstance is the “FHA back to work program”.
- No Foreclosures – If you have had a foreclosure in the last 3 years you will be disqualified for FHA financing, unless the foreclosure was due to what is called an “extenuating circumstance” such as job loss or medical emergencies. The program you may be eligible for if you are within 3 years of a bankruptcy, but it was due to an extenuating circumstance is the “FHA back to work program”.
Who is a FHA loan right for?
FHA loans are best for those with fair or good credit, but not necessarily excellent credit. They are also great for those seeking a low down payment, or to work with a down payment assistance program. Other applicants who an FHA loan will be the right fit for are unmarried couples, or other types of non-married co-applicants who want to buy a home together. Many individuals or co-applicants who can not qualify for other types of home loans, will qualify for FHA.
What are some other advantages of a FHA loan?
Aside from the benefits of less strict qualification guidelines and low down payments, they offer other benefits. This includes that FHA loans are assumable, meaning you can transfer the loan to a qualifying other party. Another great aspect of FHA loans is the refinancing options. Once you are in an FHA insured loan, you find refinancing to be a quick and easy process. FHA provides qualifying borrowers with a streamline process for refinancing. The FHA streamline refinance program only requires a small amount of documentation in order to close, and does not require an appraisal (your previous appraisal will be valid to use again on your streamline refinance). Another advantage FHA loans offer is the highest LTVs on cash out refinances.
Conventional Loans for First Time Home Buyers
Conventional loans are recommended for borrowers who can place a large down payment down on a home, and who have good-to-excellent credit history. If you have the financial means to place 20% or more down then you certainly will want to evaluate the advantages of a conventional loan for your home purchase. The primary benefit is that you will not have to pay PMI (private mortgage insurance) which is only required on loans that have an LTV greater than 80%. This can save you a lot of money. FHA loans require MIP (monthly insurance premiums) for all loans, which can be costly. When you speak with a loan representative they will be able to answer all of your questions about what loan program suits you best.
- Minimum of 3% down payment.
- 620 credit score or higher to qualify.
- No bankruptcies within the last 2 years.
- No foreclosures within the last 3 years.
- Maximum debt-to-income ratio of 45%.
- 2 months pay stubs.
- 2 months bank statements.
- 2 years tax returns.
- Mortgage insurance (for loans over 80% LTV).
Who is a conventional loan right for?
Conventional loans are best for those who have excellent credit, and also for those who are able to place a large down payment on the home purchase. This is especially the case if you are able to put 20% or more down, since this will allow you to avoid paying mortgage insurance. However, conventional loans can still the better choice for certain borrowers with who would like to put a small down payment. There are options for a 5% and even 3% down (the “conventional 97 loan”).
What are some advantages of conventional mortgages?
Some other advantages of conventional loans is that you can purchase investment properties. Other loan types do not allow second homes or rental properties, but conventional mortgages do. There is also a wide range of options related to the repayment schedules (30 year, 15 year, etc.) and other loan terms such as more options for both fixed and adjustable rates.
USDA Loans for First Time Home Buyers
Considering buying a home in a rural area? The United States Department of Agriculture (USDA) offers favorable financing terms to qualifying borrowers. This includes 100% financing (no money down), as well as other incentives to Americans in the market to purchase a rural or agricultural property. This program is called the USDA rural development loan, or the USDA guaranteed loan.
- 620 credit score or higher.
- No bankruptcies in last 3 years.
- No foreclosures in last 3 years.
- You must be a US citizen.
- 2 years verifiable employment history.
- 2 months bank statements and 2 years tax returns.
- Income limited to 115% of the median average income for your area (we can help you determine what this is).
- There are strict property requirements, such as only homes in certain rural or suburban areas.
Who is a USDA loan right for?
USDA loans are for those with low and moderate income who want to buy a rural home. Only designated areas outside of cities are eligible for USDA financing. This includes rural zones, small towns, and many areas just outside of major cities.
What are advantages of the USDA rural development loan?
The major advantages of USDA loans is that they provide an incredible opportunity to a segment of the market that has been underserved. Rural communities, especially low income families, can buy a home backed by the US government, and with excellent loan terms. This includes no down payment, low mortgage insurance costs, and low income can qualify.
VA Loans for First Time Home Buyers
If you are an active duty military member or retired veteran, we recommend that you pursue a VA loan. The Veterans Administration provides qualifying military members and veterans with the best home loan terms in the nation. In most other scenarios, we would recommend FHA loans for first time buyers, but the Veterans Administration provides the very best mortgages to veterans. You may qualify for 100% financing and special low cost and low rate loans. We will help assist you in figuring out what you qualify for.
- Time Served in Military – the first and foremost qualification for a VA is to have served at least 181 days on active duty, 90 days wartime, or 6 years in Reserves or National Guard. A Certificate of Eligibility is required (we can assist you in explaining how to receive yours if you would like our help).
- Credit Requirements – 620 credit score or higher at a minimum. Other VA lenders might be able to help you with a lower score than a 620 mid score, but that is our minimum credit score requirement.
- Employment Requirements – 2 years of work history is required for VA loans. This can include changes to your job, but consistency of employment is important.
- Documentation – Once you apply you will receive an approval (if you qualify), which will outline what documentation is needed. This usually consists of pat stubs to verify employment, bank statements, and tax returns. This is in addition to the COE.
- No Bankruptcies or foreclosures – 3 years minimum out of bankruptcy or foreclosure.
Who is a VA loan right for?
Active duty members of the military and retired veterans, as well as qualifying spouses.
What are some other advantages of a VA loan?
The most significant advantages of VA loans are that you may qualify for 100% financing which means no down payment. The mortgage insurance costs are also lower on VA loans. Another notable benefit is that on future refinances you might be able to cash out up to 100% of the property value.
Jumbo Loans for First Time Home Buyers
Any loan that does not meet the conforming or FHA loan limits is a jumbo loan. The FHA loan limits for Longmont, which is in Boulder County, are as follows: Single unit: $474,950. Two units: $608,000. Three units: $734,950. Four units: $913,350. For conforming loans, which are used for conventional and VA loans, the maximum loan limits are the same as the FHA loan limits. If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000. It is important to mention that most jumbo loan products require a higher down payment, and assistance is certainly not available for these types of homes.
Jumbo Loan Requirements:
- 640 credit score.
- 25% down payment.
- No bankruptcies in last 2 years.
- No foreclosures in last 2 years.
- 2 years tax returns.
- 2 most recent bank statements.
- Proof of assets.
Who is a jumbo loan best for?
Someone who wants to purchase a home above the conforming or FHA loan limits. They are intended for expensive homes, luxury homes, and any home that costs more than the loan limits allow.
What are the advantages of a jumbo loan?
The main advantage of a jumbo loan is that it provide financing for homes that do not meet the conforming or FHA loan limits. If it were not for jumbo financing, there would not be an opportunity to purchase a home that exceeds the loan limits.
Longmont Down Payment Assistance Programs and Grants
Longmont, Colorado citizens are extremely lucky in that there are two great opportunities for down payment assistance. One is offered through a partnership between the city and Boulder County while the other is offered as an incentive to buy with Thistle Communities.
City of Longmont – Down Payment Assistance Program
Available for first-time homebuyers, the City of Longmont’s Down Payment Assistance Program covers most families in need both in Longmont and across Boulder County, excluding the City of Boulder. Though originally funded by the Community Development Block Grant, it now obtains its funds from income generated by the program itself. When loan money is paid back by borrowers, that money is then immediately reinvested into new buyers. Loans awarded can be up to 8.5% of the property’s purchase price up to a maximum of $15,000.
Qualifications & Process
Applying for the program comes in two steps. The first determines if the homebuyer is eligible for the loan. In order to pass this step, these qualifications must be met:
- Household’s gross income must be no more than 80% of Boulder County’s median income. The “household” includes all those living in the home that earn an income regardless of their inclusion or exclusion on the mortgage.
- Each family member must also meet specific asset requirements. This means each individual family member must have no more than 80% of the county’s median income in assets. These include, but are not limited to, checking, savings, money market and retirement accounts.
- Borrower has to be a first-time homebuyer, meaning they cannot have owned a house in the past three years. Exceptions are made for divorcees. If there is more than one buyer, all must be first-time homebuyers unless they are a non-occupying co-borrower.
- Prior to the signing of the purchase contract, borrowers must attend and complete a Home Ownership Training Course.
- Borrower must qualify for a first mortgage that is large enough to cover the property. Co-borrowers are permitted. Mortgages that are interest-only, adjustable-rate or subprime are not eligible.
- Total housing debt, including first mortgage and all subordinate financing, cannot be more than 100% of the property value at closing. To avoid this, borrower may need to contribute more than the minimum required.
- A minimum of $2,000 or 1% of the purchase price, whichever is greater, must be paid by the borrower using their own money. Said money cannot be gifted by another.
- A one-on-one budget session must be held between borrower and Housing Counselor.
- Property on the mortgage must be used as the primary residence.
- All members of the household are required to provide approved identification forms and prove to be lawful residents of the US.
- All residents over the age of six are required to submit their Social Security cards before closing.
The second stage involves the property passing the following requirements:
- Purchased property must be within Boulder County legal limits but outside the City of Boulder.
- Purchased property can only be used as the sole residence of the borrower. Borrower cannot own other habitable property.
- Appraised value or purchase price cannot go over $299,000.
- At the time of purchase, the house can either be owner-occupied or vacant. The funds cannot be used to displace tenants because of the purchase of the property. Should the borrowers be buying a home they currently rent, they are eligible.
- All properties must pass a third party inspection. Should there be any documented code violations or health and safety concerns, all of these must be fixed. The documentation must then be presented to the City of Longmont. This inspection will be scheduled following the passing of the first step of the application process. If a property is under contract, the Program cannot guarantee these dates will be met.
- Home constructed prior to 1978 have to undergo a Visual Lead Based Pain Assessment before closing. Should there be any pealing, chipped, flaking or other deteriorating paints, said paint must be tested for lead usage. Should it test positive, the paint must be abated before closing.
- All properties within flood zones must obtain flood insurance prior to closing and maintain it for the entirety of the life of the property and life of the loan.
The loan varies based on applicant financial situations. Those that earn between 51-80% of the area’s median income (AMI), the loan has a 3% interest that amortizes over a period of 10 years. Those earning below 50% AMI receive a deferred loan. This means there are no monthly payments and only a 4% simple interest rate is charged for a period of 10 years. Payment of the loan is due at sale, refinance or change of ownership.
Non-occupying co-borrowers are people that can be added to a loan to help obtain assistance without actually needing to live on the mortgaged property. These are allowed for the Down Payment Assistance Program however the co-borrower must provide a letter to the Program stating that their income will not be contributing to the mortgage payments and that they will not be living on the property. They will then be listed on the City’s promissory note and deed of trust for the loan. They will also be held legally responsible for repaying the assistance loan.
Thistle Communities – Down Payment Assistance
Begun in 1989, Thistle is a private, non-profit real estate company that provides homes for over 1,700 people every year. They do this with the help of various programs, including the City of Longmont’s down payment assistance program. Because it builds its own communities, only properties available in their specific communities come with special assistance. To live in these communities, there are income restrictions.
As for the program itself, applicants are expected to apply and wait for a response. Following a review of the application, eligible borrowers are provided with a list of down payment assistance opportunities that match their specific situations.
To even be offered assistance, applicants must meet both income and asset requirements. This means both the total for the annual income and the total of all assets, including savings accounts and retirement accounts, cannot be above a certain amount based on the total number of members in a household.
Current income limits are:
- One household member – $46,100
- Two household members – $52,650
- Two household members – $59,250
- Two household members – $65,800
- Two household members – $71,100
- Two household members – $76,350
Current asset limits are:
- Two household members – $55,000
- Two household members – $70,000
- Two household members – $85,000
- Two household members – $100,000
- Two household members – $115,000
- Two household members – $130,000
Beyond this, each family member 18 years or older is allowed to have $30,000 to $110,000 in retirement accounts that do not count toward this total. This amount also varies based on age. Under 40, the total can only be a maximum of $30,000. Ages 40-55 can reach $55,000. Over 55 years can have $110,000.
2018 Longmont First Time Home Buyer Tax Credits
The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios. How this works, is you can deduct up to $2,000 off your federal tax bill each year. The MCC allows up to 35% of your annual interest to be eliminated (with the cap being at $2,000). Some great news, is this can be used in addition to standard mortgage interest deductions!
Frequently Asked Questions About Buying Your First Home
How much do I need for a down payment?
It depends on the type of loan you want. USDA and VA loans often will not require any down payment. FHA loans require a 3.5% down payment, which if you get down payment assistance, only .5% is required. Conventional loans typically require either 3% or 5%.
How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.
Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.
How much can I afford to borrow?
The amount that you can borrow depends on your particular loan type and income. There are maximum loan limits which are set at the county level. Conforming loan limits are the maximum lending amount allowed for conventional mortgages. FHA loans have their own loan limits. You can search the maximum loan amount for your county for each particular loan type by entering your zip code (or any zip code for the county you want to buy a home in). This will display the maximum amount available for all loan types. This is not necessarily how much you can borrow though, but the max amount in your location. Your personal limits will be based upon your income and how much debt you have. For instance, with most loans, you can not have a mortgage payment and debts exceed 43% of your income.
Can I buy a home without a real estate agent?
It depends on your state and the type of loan program. For some states, you must use an agent. In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages. However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.
Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.
Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.
Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband. The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.
Can I buy a home after foreclosure?
Most loan programs will require you to wait 3 years before you can buy again after a foreclosure. There are some instances that you might be able to get an approval in as little as 12 months. This includes the FHA extenuating circumstances program (more commonly known as the “FHA back to work program”). If you lost your job due to a job loss or some other event out of your control, you might be able to purchase a home with a FHA loan after only 1 year.
I do not have much credit, can I still get approved?
A 580 minimum is required for a FHA loan. A 620 is required for all others. You may find a lender who can help you if you have poor credit. We do not offer any bad credit mortgage programs
Have more questions about buying your first home? View our list which covers even more commonly asked questions about buying a home. Or you can give us a call at 1-800-731-3560.