Down payment assistance can make homeownership more accessible, but the details matter. Colorado Housing and Finance Authority, commonly called CHFA, offers mortgage programs that can be paired with assistance for down payment and closing costs. The assistance is not a stand-alone check and it is not automatically $25,000.
The right way to think about CHFA is as a group of first-mortgage programs with different assistance options layered on top. The buyer still has to qualify for the mortgage, meet the applicable program rules and work through a CHFA Participating Lender.
CHFA assistance must be paired with a CHFA first mortgage
CHFA’s standard down payment assistance is available to buyers using an eligible CHFA first mortgage program. A buyer cannot generally take a conventional mortgage from one lender and then independently add CHFA assistance afterward.
That matters because the first-mortgage program controls more than just the assistance amount. Loan type, income limits, credit requirements, pricing and other underwriting rules can vary by CHFA program.
Option 1: the CHFA Down Payment Assistance Grant
CHFA’s standard Down Payment Assistance Grant can provide up to the lesser of $25,000 or 3% of the first mortgage loan amount. The grant does not require repayment.
For example, 3% of a $400,000 first mortgage is $12,000. In that example, the assistance would not automatically become $25,000 simply because $25,000 is the maximum cap.
CHFA notes that restrictions and higher interest rates apply to its down payment assistance options. That is important when comparing the grant with a loan that has no assistance. The buyer should compare the entire mortgage structure, not just the amount of cash received at closing.
Option 2: the CHFA Down Payment Assistance Second Mortgage
The standard CHFA Down Payment Assistance Second Mortgage can provide up to the lesser of $25,000 or 4% of the first mortgage loan amount.
Unlike the grant, this assistance is a loan. Repayment is generally deferred until a triggering event such as payoff of the first mortgage, sale or refinance of the home, or the property no longer being the borrower’s primary residence.
Because there is generally no monthly payment due on the deferred second mortgage, it can feel invisible after closing. It should not be forgotten. The balance can become relevant when the owner sells or refinances later.
You choose the grant or the standard second mortgage, not both
CHFA’s current homeownership FAQ says a borrower may receive either the Down Payment Assistance Grant or the Down Payment Assistance Second Mortgage with the CHFA first mortgage, but not both.
That creates a tradeoff. The grant provides less assistance under the standard percentage formula but does not have to be repaid. The second mortgage can provide more assistance upfront but creates a balance that may have to be repaid later.
CHFA FirstGeneration works differently
CHFA FirstGeneration and FirstGeneration Plus are designed for eligible buyers who are beginning a family legacy of homeownership. Under the current 2026 rules, at least one borrower must be a first-generation homebuyer, and all borrowers must be first-time homebuyers. A borrower raised in foster care can qualify under separate eligibility language if that borrower has never owned a home.
CHFA defines a first-generation homebuyer as a borrower who has never owned a home and whose parents or guardians have never owned a home. CHFA expanded the program so only one borrower on the loan needs to meet the first-generation definition, although every borrower must still qualify as a first-time homebuyer.
The 2026 FirstGeneration Plus matrix provides a $25,000 zero-percent silent second mortgage. It has no monthly payment and no accrued interest, but the balance must generally be repaid upon sale, refinance, payoff of the first mortgage or when the home is no longer the borrower’s primary residence.
As of the current February 4, 2026 program matrix, FirstGeneration is limited to 30-year fixed-rate FHA 203(b) purchase loans. Program rules can change, so buyers should verify the current matrix with a CHFA Participating Lender rather than assuming a loan type will qualify.
FirstGeneration can use the $25,000 in more ways
The current FirstGeneration Plus matrix allows the $25,000 second mortgage proceeds to be used toward down payment, closing costs, prepaid expenses, principal reduction and/or a permanent interest-rate buydown.
That flexibility can matter when deciding whether the buyer’s biggest constraint is cash to close, monthly payment or both.
CHFA does not eliminate the buyer’s own financial contribution
CHFA currently requires a Minimum Financial Investment of $1,000. That contribution can count toward the required down payment or closing costs, and eligible gifts can be used to satisfy the minimum contribution.
The buyer may still need additional money depending on the purchase price, loan program, required down payment, closing costs, prepaid expenses, appraisal, inspection costs and how much assistance is actually available.
There are income limits
CHFA programs have income limits. The applicable limit can depend on the program, household size, county and whether the property is in a targeted or non-targeted area.
This is one reason a buyer should not self-disqualify or assume eligibility from a statewide number found online. The participating lender should apply the current income limit to the actual household and property.
There are credit and underwriting requirements
CHFA’s current homeownership FAQ states that borrowers generally need a 620 mid-credit score, with exceptions possible for borrowers who do not have a credit score. Meeting the CHFA score requirement does not by itself mean the mortgage is approved.
The borrower must also satisfy the underwriting requirements for the applicable first-mortgage program. Income, debts, assets, employment, property eligibility and the loan type still matter.
Homebuyer education is required
CHFA requires borrowers purchasing a home with a CHFA first mortgage to complete CHFA-approved homebuyer education before closing. CHFA offers approved education options across Colorado, including online and classroom-based courses.
This is not simply an administrative box to check at the end. Taking the class early can help a buyer understand financing, closing costs, home maintenance and the obligations that continue after the purchase.
CHFA assistance does not automatically make the mortgage cheaper
The amount of assistance should not be evaluated in isolation. CHFA states that higher rates apply to its down payment assistance options. A buyer should compare the CHFA option with other available mortgages using the same framework used for any loan: interest rate, APR, points or credits, mortgage insurance, monthly payment, cash to close and expected time in the loan.
A program that reduces the cash needed today can still carry a higher monthly cost or create a second-mortgage balance that matters later. That does not make the program bad. It simply means the benefit is the access to cash and financing structure, not 'free money' in every scenario.
CHFA can help with more than the down payment
Depending on the specific CHFA program, assistance can be used for eligible down payment, closing costs and prepaid expenses. Some specialized programs allow additional uses such as principal reduction or a permanent interest-rate buydown.
This can be particularly useful for a buyer who technically has enough for the minimum down payment but would otherwise use nearly all available cash to close.
What CHFA cannot do
CHFA cannot guarantee that a buyer will qualify for a mortgage. It cannot eliminate income, credit or underwriting requirements. It does not guarantee that every buyer receives $25,000. It does not allow the standard grant and standard DPA second mortgage to be stacked together. And the second-mortgage assistance is not the same as a non-repayable grant.
CHFA also does not replace the need to compare other loan options. Some buyers may qualify for a lower-cost conventional, FHA, VA, USDA or other financing structure without CHFA assistance. The useful comparison is the complete financing plan, not the assistance amount alone.
A practical way to evaluate CHFA
Ask a CHFA Participating Lender to show at least two scenarios when possible: the CHFA option with assistance and a reasonable alternative without assistance. Compare the estimated cash to close, monthly payment, interest rate, APR, mortgage insurance and any second-mortgage balance.
Then ask what would happen if the home were sold or refinanced in three years, five years or ten years. That makes the deferred second mortgage easier to understand in the context of the buyer’s actual plans.
For an eligible buyer who is short on cash to close, CHFA can be a powerful tool. The goal is to use it intentionally, with a clear understanding of what is a grant, what is a loan and what the buyer will still owe after closing.
Official sources and further reading
CHFA: Homeownership overview and FirstGeneration
CHFA: Current programs, forms and program matrices
CHFA: Find a Participating Lender
Related resources
Mortgage Rate vs. APR vs. Points vs. Lender Credits
Using a 401(k) for a Home Down Payment: The Pros, Cons and Questions to Ask First