Pairing Colorado down payment assistance with a VA loan
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
Program figures verified July 2026 — details change; confirm your scenario with us.
VA loans don't require a down payment, so why would a Veteran add down payment assistance? Closing costs. Colorado's CHFA assistance can cover closing costs and prepaids on a $0-down VA loan, getting an eligible buyer close to zero cash to close. We help you decide whether assistance even makes sense for your situation, and which single program fits best.
How CHFA assistance works with a VA loan
The Colorado Housing and Finance Authority (CHFA) is the statewide agency for first-time and qualified-Veteran buyers. Its down payment assistance comes two ways, and you choose one:
- Grant — up to the lesser of $25,000 or 3% of your first mortgage. It is applied at closing and never has to be repaid.
- Deferred second mortgage — up to the lesser of $25,000 or 4%. There is no monthly payment; you repay it only when you sell, refinance, or pay off the first mortgage.
On a VA first mortgage, that assistance typically goes toward closing costs and prepaids rather than the down payment (which VA already covers at $0).
The CHFA programs
| Program | Who it fits | Notes |
|---|---|---|
| CHFA FirstStep | First-time buyers, qualified Veterans, or buyers in a targeted area, using an FHA, VA, or USDA loan | Pairs with a VA first mortgage |
| CHFA FirstStep Plus | Same audience using a conventional loan | Conventional version |
| CHFA FirstGeneration | Buyers where at least one borrower is a first-generation homebuyer | Deferred second up to $25,000 |
Qualified Veterans are exempt from the first-time-buyer requirement on FirstStep, which is a meaningful advantage if you have owned before.
CHFA eligibility (2026)
- Credit: a mid score of 620 (CHFA also allows borrowers with no score, with exceptions).
- Homebuyer education: every borrower must complete a CHFA-approved course before closing.
- Income limits: roughly $130,400 for a 1-2 person household in a non-targeted area, higher in targeted areas and for larger households (up to about $182,560).
- One program per transaction: you cannot combine multiple down payment assistance programs.
Things to watch
- Use a VA-approved CHFA lender. The loan officer must be able to run the VA first mortgage and the CHFA assistance under one underwrite.
- Run the income test early. A working spouse's income can push a household over the CHFA limit, so check before you fall in love with a home.
- Funding fee waiver. If you have a 10%-or-higher service-connected disability rating, the VA funding fee is waived. Don't let it get added back.
- The deferred second. If you choose the deferred-second option, remember it is repaid on sale, refinance, or payoff. A cash-out refinance will require paying it off; a VA IRRRL can usually subordinate it.
Frequently asked questions
Why would a VA buyer need down payment assistance if VA is $0 down?
VA already covers the down payment, so CHFA assistance is most useful for closing costs and prepaids. On a $0-down VA loan, pairing CHFA assistance can get an eligible buyer close to zero cash to close.
How much down payment assistance does CHFA offer in 2026?
CHFA offers either a grant of up to the lesser of $25,000 or 3% of the first mortgage that never has to be repaid, or a deferred second mortgage of up to the lesser of $25,000 or 4% with no monthly payment, repaid only when you sell, refinance, or pay off the first mortgage.
What are the CHFA credit and income requirements?
CHFA requires a mid credit score of 620 and completion of a CHFA-approved homebuyer education course. 2026 income limits run about $130,400 for a 1-2 person household in a non-targeted area, higher in targeted areas and for larger households.
Can I combine more than one down payment assistance program?
No. Only one down payment assistance program applies per transaction. We help you pick the single program that fits your situation best rather than trying to layer several.
Does using CHFA assistance affect my VA entitlement?
No. The CHFA assistance is separate from your VA first mortgage. Your VA loan uses entitlement; the assistance does not, so you preserve future-purchase entitlement.
Want Mike to model your specific scenario? Send your numbers or call (480) 296-6513.