CHFA Down Payment Assistance Second Mortgage Loan

The CHFA Down Payment Assistance Second Mortgage Loan would lend about $17,023 on a $441,000 Colorado Springs home, which is 4% of the roughly $425,565 FHA first mortgage. That is $1,588 more than the $15,435 FHA minimum down payment, so the full 3.5% is paid and the extra $1,588 goes toward closing costs.

Colorado Springs closing costs are estimated at $9,000 to $13,000. Subtract the $1,588 left over from the loan and the buyer still owes roughly $7,400 to $11,400 at the table, plus the $1,000 minimum contribution CHFA requires. Seller concessions can help cover a portion of closing costs depending on your purchase contract.

By comparison, the CHFA Down Payment Assistance Grant on this same home would provide approximately $12,767 (3% of the first mortgage), leaving a $2,668 gap on the down payment alone. The second mortgage loan provides about $4,256 more in total assistance, enough to fully cover the down payment and chip into closing costs, though it must be repaid when you sell or refinance.

The CHFA Down Payment Assistance Second Mortgage Loan must be paired with a CHFA first mortgage program such as CHFA FirstStep (FHA), CHFA Preferred (conventional), or CHFA SmartStep (FHA, VA, or USDA). You cannot use this DPA option with a non-CHFA first mortgage. You must also choose between this second mortgage loan and the CHFA Down Payment Assistance Grant. One purchase gets one CHFA DPA product, never the loan and the grant together.

Outside of the CHFA DPA options, buyers may be able to combine this program with other non-CHFA assistance such as the CHAC Down Payment Assistance Program, which provides $5,000 to $12,000 through the Colorado Housing Assistance Corporation. Employer assistance programs, community grants, and gifts from family members can also supplement CHFA assistance to help cover remaining closing costs.

The CHFA FirstGeneration program offers a separate first mortgage track with its own $25,000 DPA for first-generation homebuyers. Because FirstGeneration includes its own first mortgage and DPA, it operates as a standalone option rather than layering on top of a standard CHFA first mortgage with this second mortgage loan.

The CHFA Down Payment Assistance Second Mortgage Loan provides the most upfront assistance of the standard CHFA DPA options, offering up to 4% of the first mortgage compared to 3% with the grant. On a $441,000 purchase in Colorado Springs, that extra percentage point translates to roughly $4,256 more in assistance, enough to fully cover an FHA minimum down payment with money left over for closing costs. The program is open to repeat buyers, requires no monthly payments during the deferral period, and the 620 credit score minimum keeps it accessible to a broad range of Colorado buyers.

The main drawback is the repayment obligation. Unlike the CHFA Down Payment Assistance Grant, the second mortgage loan balance must be repaid in full when you sell, refinance, or move. For a buyer who purchases at $441,000 and receives $17,023 in assistance, that full amount comes out of their sale proceeds later. Buyers planning to stay five or more years and build equity typically find the tradeoff worthwhile, but those expecting to move or refinance within a few years should weigh whether the extra $4,256 upfront justifies the future repayment. The program also requires pairing with a CHFA first mortgage, which means buyers must work within CHFA rate and fee structures rather than shopping the broader mortgage market.