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Pueblo, Colorado First Time Home Buyer

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Pueblo, CO – First Time Home Buyer Programs

Are you looking to purchase your first home? Our first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Pueblo, CO – First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  The FHA loan limits of Pueblo County are as follows:  Single unit: $314,827.  Two units: $403,125.  Three units: $487,250.  Four units: $605,525.  For conforming loans, which are used for conventional and VA loans, the maximum loan limits are:  Single unit:  $484,350.  Two units:  $620,200.  Three units: $749,650.  Four units: $931,600.   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.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

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Pueblo, CO – Down Payment Assistance Programs 

When you’re on the hunt for home buying financial assistance, Pueblo is Colorado’s best kept secret. With one option funded by a myriad of types of help and the other perfect for the majority of homebuyers, it’s no wonder that the city continues to flourish.

NeighborWorks of Pueblo Down Payment & Closing Cost Assistance
Helping local Pueblo residents buy homes and keep neighborhoods health since 1977, NeighborWorks follows the guidelines of the US Department of Housing and Urban Development (HUD) to better serve the needs of the local community. As of 2014, they became the only certified Community Housing Development Organization in the city.

This program is tightly guarded by the city of Pueblo as they don’t outline the requirements on their site like most other programs do. Instead, applicants are asked to complete an information packet to be brought in during a scheduled meeting. On this pack, basic information is asked for as well as facts regarding finances and credit reports. Should this be deemed acceptable in terms of income limitations and property value, NeighborWorks then takes on the responsibility of finding loans to suite the situation. Financially, applicants are expected to pay an upfront fee of $10.94 for a single person or $19.90 for a joint household to cover the costs to pull a credit report.

In essence, there is no one program NeighborWorks uses to help individuals finance a house. Instead, they pull from the best available options they currently have, and these are always in flux. That being said, one of the offers is a grant donated by The David and Lucile Packard Foundation, a family foundation that works to invest in the community and its leaders. Donated back in 2014, the organization donated a total of $30,000 to be divided up and used until September 2016 when the foundation will donate again.

City of Pueblo Home Down Payment Assistance Program
Also known as HDAP, this assistance program is possible through the partnership of the City of Pueblo and private lenders. With it, low- to mid-income families can receive help when on the market for a new home.

As for the loan, this can be an FHA, VA, Fannie Mae or any other conventionally recognized mortgage type, and the successful applicant must be approved for one of these. Because HDAP funds the purchase of the home, it is required that the property meet the minimum in regards to safety and health as designated by the US Department of House and Urban Development. This means a property inspection is also obligatory.

Following the application process, eligible borrowers will then receive up to $5,000 in assistance. This money is then free to be used to match up to 50% of the down payment or cover the usual closing costs. That being said, the actual percentage of the mortgage this loan will cover can vary based on the mortgage it is being applied to. Like most loans, the residents must use the home as their main residence and renting is strictly forbidden.

This loan is deferred for five years. Should the borrower still live in the home following this period, the loan is entirely forgiven so long as all requirements have been met. Should the property be either refinanced or sold prior to this period ending, the loan will be due back in full.

Pueblo 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.  Conventional loans typically require either 3% or 5%.  If you receive down payment assistance, you may not need any money for your down payment.

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not 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.

Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.

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.

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.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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