CO VA loan glossary
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
VA loans + CO-specific Veteran programs have a vocabulary of their own. This glossary collects the terms Veterans actually encounter, plain-English definitions, and CO-relevant context where useful. Bookmark this page.
Program figures verified July 2026. Details change; confirm your scenario with us.
A
AMI (Area Median Income): Income benchmark used by CHFA Down Payment Assistance (DPA) programs to determine eligibility. 2026 Denver-area AMI is roughly $120,000 for a household of four; CHFA income limits are set above AMI.
Assumable: A VA loan can be assumed by a qualified buyer (Veteran or non-Veteran). The original Veteran's entitlement stays tied to the loan unless the assuming party is also a Veteran substituting their own entitlement. Full guide.
ARM (Adjustable Rate Mortgage): VA permits ARMs but most VA loans are fixed-rate. Less common in CO market.
B
BAH (Basic Allowance for Housing): Monthly housing stipend paid to active-duty service members. Varies by base + rank + dependent status. 2026 Fort Carson E-5 with dependents is roughly $2,100 (Colorado Springs MHA). BAH calculator.
Back-end DTI: Total debt obligations (PITI + other monthly debts) as a percentage of gross income. VA guideline: 41%. Some lenders accept higher with strong residual income.
C
Cash-out refi: VA refinance that pulls equity out of the home. VA allows up to 100% LTV cash-out (higher than conventional 80% cap). Funding fee applies (2.15% first use / 3.30% subsequent).
Metro district: Colorado's metropolitan (special) districts fund infrastructure in many master-planned communities and add a separate line to your property-tax bill. The VA underwriter includes it in your DTI, always pull the district's mill levy before you offer.
Closing costs: Fees paid at closing, typically 2-4% of loan amount. VA caps several. Seller can pay up to 4% in concessions.
Cluster home: Detached or semi-detached home in a planned community with shared common-area maintenance. Common in CO retirement communities. VA loan eligible if HOA approved.
COE (Certificate of Eligibility): VA-issued document confirming a Veteran's eligibility for the VA loan benefit. Free, obtained through VA.gov or via Mike. Required before VA loan can close.
Equitable distribution: Colorado is a common-law, equitable-distribution state (not a community-property state). Marital property is divided fairly rather than automatically 50/50, which affects how VA loans are titled and how divorce and estate planning interact with the home.
Compensation: VA disability monthly payment based on rating (10%-100%). Federally tax-free in all states.
Conforming loan limit: Maximum loan size for standard VA (or conventional) financing. 2026 CO baseline: $832,750 in most CO counties; high-cost resort counties (Eagle, Pitkin, Garfield) up to $1,249,125.
D
Defensible space: Cleared/maintained vegetation around a home in wildfire-prone areas. Required by VA MPR + CO Department of Forestry in WUI zones.
DD-214: Discharge document issued at military separation. Used to verify VA loan eligibility + claim other Veteran benefits.
Disability rating (VA): Percentage rating (0% to 100%, in 10% increments) assigned by VA based on service-connected disabilities. 10%+ waives the VA funding fee. A 100% permanent-and-total rating, or VA individual-unemployability status (Amendment G), qualifies for the Colorado property-tax exemption.
DPA (Down Payment Assistance): CO programs that provide grants or forgivable seconds to help with down payment + closing costs. Top programs: CHFA FirstStep, FirstStep Plus, and FirstGeneration. Stacker guide.
DTI (Debt-to-Income ratio): Total monthly debt divided by gross monthly income. VA guideline: 41% back-end. Front-end (PITI only) typically should be ≤29%.
E
Earnest money deposit (EMD): Money buyer puts up at offer acceptance to show good faith. Standard CO EMD is 1% of price; 2-3% strengthens VA offers in competitive markets.
Entitlement: Veteran's $0-down VA loan capacity. Currently bonus entitlement brings the VA guaranty to 25% of the $832,750 conforming limit, roughly $208,187 in 2026, and it doesn't cap the loan size for Veterans with full entitlement.
Escrow account: Account where lender holds property tax + insurance funds and pays them when due. Most CO VA loans use escrow.
F
FAIR Plan (CO FAIR Plan): Insurance of last resort for homes that can't get standard market insurance, typically high-wildfire-risk CO properties. More expensive, more limited coverage.
FHFA limit: Federal Housing Finance Agency conforming loan limit. 2026 baseline: $832,750 in most Colorado counties; high-cost resort counties (Eagle, Pitkin, Garfield) run up to $1,249,125.
First use: A Veteran's first time using VA loan benefit. Lower funding fee (2.15% at $0 down) vs subsequent use (3.30%).
Front-end DTI: PITI as a percentage of gross income. VA prefers ≤29% but DTI alone doesn't decide approval.
Funding fee: One-time VA fee paid at closing (can be financed). 2.15% first use, 3.30% subsequent at $0 down. Waived for 10%+ disability rating. Calculator.
G
Gross income: Income before taxes. Used for DTI calc.
Gross-up: Treatment of tax-free income (VA disability, BAH, etc.) as higher equivalent taxable income for mortgage qualification. Standard 25% boost. Calculator.
H
Disabled Veteran property tax exemption (Colorado): Colorado exempts 50% of the first $200,000 of a home's actual value for a Veteran rated 100% permanent-and-total service-connected, or with VA individual-unemployability status (Amendment G, effective tax year 2025), and for Gold Star spouses. Lower schedular ratings without TDIU do not qualify. Full guide.
HOA (Homeowners Association): Community association charging monthly/annual fees for shared amenities + maintenance. Common in CO master-planned communities. Affects VA DTI calculation.
CHFA down payment assistance: Colorado Housing and Finance Authority assistance: a grant up to the lesser of $25,000 or 3%, or a deferred second up to the lesser of $25,000 or 4%. Credit 620; income limits apply. Strong stacker with VA.
CHFA FirstGeneration: Colorado Housing and Finance Authority program for first-generation homebuyers, offering a deferred second mortgage of up to $25,000 in down payment assistance.
I
IRRRL (Interest Rate Reduction Refinance Loan): VA simplify refi. No income docs, no appraisal, no funding fee if disability waiver. Must pass VA's 36-month recoupment test. Calculator.
Inspection: Buyer-paid home inspection (separate from VA appraisal). Identifies condition issues + bargaining points.
J
Joint VA loan: Two Veterans buying together can use combined entitlement. Each contributes their entitlement; combined down-payment requirement scales accordingly.
Jumbo VA: VA loan above the FHFA conforming limit ($832,750 in CO). Veterans with full entitlement can finance to ~$4M with select lenders.
L
Land lease: Property where you own the home but lease the land. Rare in CO. VA typically can't finance.
LO (Loan Officer): Mortgage professional originating loans. Mike is an LO at Cornerstone First Mortgage. NMLS #260555.
LTV (Loan-to-Value ratio): Loan amount divided by appraised property value. VA allows 100% LTV (and effectively higher with funding fee financed).
Fort Carson: U.S. Army post in Colorado Springs (El Paso County), home of the 4th Infantry Division. Base hub page.
M
MCC (Mortgage Credit Certificate): Federal tax credit for portion of mortgage interest paid. CO Housing Authority administers. Can stack with VA + DPA.
MHA (Military Housing Area): Geographic area used to set BAH rates. Fort Carson, Peterson, Schriever, and USAFA fall in the Colorado Springs MHA; Buckley SFB falls in the Denver-Aurora MHA.
MPR (Minimum Property Requirements): VA's property standards. Working A/C, sound roof, adequate water/sewer, no major safety issues, defensible space in wildfire areas.
N
NADL (Native American Direct Loan): VA loan program for Native Veterans on tribal trust land. VA is the direct lender. Full guide.
Net income: Income after taxes. Used for VA residual income calc.
NMLS: Nationwide Multistate Licensing System for mortgage professionals. Mike: NMLS #260555. Cornerstone: NMLS #173855.
O
Occupancy: VA requires primary residence occupancy within 60 days of closing. No exception for second homes or investment property.
Origination fee: Lender fee for processing the loan. VA caps at 1% of loan amount.
P
CHFA FirstStep: Colorado Housing and Finance Authority program for first-time buyers, qualified Veterans, or targeted-area buyers, used with an FHA, VA, or USDA loan; pairs with CHFA down payment assistance.
PCS (Permanent Change of Station): Military relocation between duty stations. 60-day window from arrival for VA primary-residence occupancy. See the first-time VA buyer guide.
PITI: Principal, Interest, Taxes, Insurance. Total monthly housing payment. Calculator.
Pre-underwriting (TBD): Full underwriting before a specific property is identified. Strongest pre-approval format; Mike issues TBD letters for CO summer-PCS situations.
Primary residence: VA loan requirement. Must occupy as primary residence within 60 days of closing.
R
Reserves (military): National Guard + Reserve service. Reservists with 6+ years qualify for VA loan benefit.
Residual income: Net income remaining after PITI + utilities + debts. VA's hidden second qualifying test (separate from DTI). Required minimums by family size + region. Calculator.
Restored entitlement: VA entitlement restored after a previous VA loan is paid off (typically via home sale). Allows reuse for next purchase.
S
Seller concessions: Money seller agrees to pay toward buyer closing costs. VA allows up to 4%.
Subsequent use: Second or later use of VA benefit. Higher funding fee (3.30% at $0 down vs 2.15% first use).
Survivor benefits: Surviving spouse of KIA or service-connected disabled Veteran may be eligible for VA loan + property tax exemptions + Dependency and Indemnity Compensation.
T
TBD (To Be Determined): Pre-underwriting before property is identified. Strongest pre-approval letter format.
Term: Length of the loan. Standard VA is 30 years; 15-year and 20-year also available.
Tribal trust land: Land held in trust by the federal government for a tribe or individual Native American. Standard VA can't finance; NADL applies.
U
Underwriting: Lender's full review of borrower + property. Verifies income, credit, assets, property.
V
VA appraisal: VA-ordered appraisal verifying property value + MPR compliance. Different from buyer's inspection.
VA Builder ID: Registration number assigned by VA Regional Loan Center to qualified builders. Required for VA construction loans.
VA disability compensation: Monthly tax-free payment based on service-connected disability rating.
VA loan limit: Maximum loan size at full guaranty. 2026 CO baseline: $832,750.
Vested Veteran: Veteran who has earned the VA loan benefit through qualifying military service.
W
Wildfire Factor: Property-specific wildfire risk score (1-10). Higher scores affect insurance availability + costs. Wildfire guide.
WUI (Wildland-Urban Interface): Areas where development meets wildland. Subject to defensible-space requirements; mostly CO mountain communities.
Z
Zero-down: Standard VA loan feature. No down payment required.
Term you encountered that's not here? Email Mike and he'll add it, this glossary grows as CO Veterans ask new questions.