CHFA FirstStep

On a $599,000 home in Denver, an FHA loan requires a minimum 3.5% down payment of $20,965. A buyer using CHFA FirstStep would get a 30-year fixed-rate FHA mortgage at a competitive rate. Pairing it with the CHFA DPA Second Mortgage (up to 4% of the first mortgage) would provide roughly $23,100 in down payment assistance as a 0% interest deferred loan, fully covering the $20,965 down payment with about $2,100 left over for closing costs.

Estimated closing costs in Denver run $12,000 to $18,000, so after applying the leftover $2,100, you would still need roughly $10,000 to $16,000 for closing costs out of pocket, plus the required $1,000 minimum borrower contribution.

Alternatively, pairing FirstStep with the CHFA DPA Grant (up to 3% of the first mortgage) would provide roughly $17,300 that never has to be repaid. The grant would cover most of the down payment, leaving about $3,600 plus closing costs out of pocket. Buyers who can cover the remaining gap may prefer the grant since it requires no repayment at sale or refinance.

CHFA FirstStep must be paired with one of CHFA's two down payment assistance options to get help with upfront costs. Buyers choose either the CHFA DPA Grant (up to the lesser of $25,000 or 3% of the first mortgage, no repayment required) or the CHFA DPA Second Mortgage (up to the lesser of $25,000 or 4% of the first mortgage, 0% interest deferred loan). You cannot receive both the grant and the second mortgage on the same loan.

CHFA does not allow Mortgage Credit Certificates (MCCs) with FirstStep loans. Buyers who want the ongoing tax credit benefit of an MCC should look at CHFA SmartStep instead. FirstStep also cannot be combined with the CHFA FirstGeneration or CHFA HomeAccess programs, as those are separate first mortgage products with their own built-in down payment assistance.

For additional assistance beyond CHFA, Colorado buyers may be able to layer on local or nonprofit programs like the CHAC Down Payment Assistance Program ($5,000 to $12,000 deferred loan), provided the combined financing meets FHA subordinate financing guidelines. Check with your CHFA participating lender to confirm whether a specific local program can be used alongside your FirstStep loan.

CHFA FirstStep typically offers the lowest interest rates among CHFA's first mortgage programs because it is limited to FHA loans funded through tax-exempt bonds. The ability to pair it with either the DPA Grant or DPA Second Mortgage gives buyers flexibility depending on whether they prefer free money upfront (grant) or a larger assistance amount (second mortgage). The 620 minimum credit score and DTI limits up to 55% make it accessible to buyers who might not qualify for conventional financing, and the $1,000 minimum contribution can come from a gift, reducing the cash barrier to entry.

The main limitation is that FirstStep only supports FHA purchases, so buyers who want a VA, USDA, or conventional loan need to use CHFA SmartStep instead. FHA loans also carry mortgage insurance premiums (1.75% upfront and 0.55% annually) for the life of the loan unless you refinance to conventional later. Mortgage Credit Certificates are not allowed with FirstStep, which means buyers miss out on up to $2,000 per year in federal tax credits. The loan may also be subject to IRS Recapture Tax if sold within nine years at a gain with increased income, though CHFA reimburses this cost. FirstStep is strongest for first-time buyers with moderate credit who want the lowest possible rate and plan to stay in the home long enough to benefit from the fixed-rate structure.