1. Conventional Fixed-Rate Mortgage

The most common home loan in Colorado, offering predictable monthly payments with a fixed interest rate over 15, 20, or 30 years.

  • Conforming loan limit 2025: $806,500 in most Colorado counties
  • High-cost counties (Pitkin, Eagle, Garfield, etc.): up to $1,209,750
  • Down payment: 3%–20%
  • Credit score: 620+
  • Mortgage insurance (PMI): Required if down payment <20%; can be canceled once the loan reaches 80% loan-to-value (LTV)

2. Adjustable-Rate Mortgage (ARM)

Begins with a fixed low rate for 3–10 years (e.g., 5/1 ARM), then adjusts periodically.

  • Down payment: 5%–10%+
  • Credit score: 620+
  • Best for: Buyers who plan to sell or refinance before rate adjusts
  • Mortgage insurance: Same PMI rules as conventional loans; removable at 80% LTV

3. FHA Loan

A popular option for first-time buyers in Colorado, backed by the Federal Housing Administration.

  • Colorado FHA loan limits 2025: $524,225 (floor) to $1,209,750 (high-cost counties like Pitkin & Eagle)
  • Down payment: 3.5% with 580+ credit score; 10% if 500–579
  • Credit score: Minimum 500
  • Mortgage insurance (MIP): Required on all FHA loans
    • If down payment <10%: MIP lasts for the life of the loan
    • If down payment ≥10%: MIP lasts 11 years

4. VA Loan

Available to Colorado veterans, active-duty military, and eligible surviving spouses.

  • No down payment required
  • No PMI (biggest cost-saving advantage)
  • No loan limit in 2025 with full entitlement
  • Credit score: Typically 620+
  • Funding fee: May apply (2.15%–3.3%) but waived for disabled veterans

5. USDA Loan

Backed by the U.S. Department of Agriculture for eligible rural and some suburban Colorado homes.

  • No down payment
  • Income limit: Up to 115% of area median income
  • Property eligibility: Must be USDA-approved rural area
  • Mortgage insurance (called guarantee fee):
    • Upfront fee: 1% of loan amount
    • Annual fee: 0.35% of remaining balance (lasts for the life of the loan)

6. Jumbo Loan

Used for homes that exceed conforming loan limits, common in luxury Colorado markets like Denver, Boulder, Aspen, and Vail.

  • Loan amounts: Above $806,500 (or $1,209,750 in high-cost counties)
  • Down payment: 10%–20%+
  • Credit score: 700+
  • Mortgage insurance: Typically not available; lenders require higher down payments instead

7. Interest-Only Mortgage

Allows borrowers to pay only interest for the first 5–10 years, then switches to principal + interest.

  • Down payment: Usually 20%+
  • Credit score: 700+ preferred
  • Best for: Short-term ownership or high-income borrowers with variable income
  • Mortgage insurance: Not common; higher equity required at closing

8. Balloon Mortgage

Short-term loan with low monthly payments and one large “balloon” payment due at the end.

  • Term: Often 5–7 years before balloon is due
  • Best for: Investors or buyers planning to sell/refinance quickly
  • Mortgage insurance: Rare; higher down payment usually required

9. CHFA Programs (Colorado Housing & Finance Authority)

Exclusive Colorado programs that help buyers with down payments and closing costs.

  • Down-payment assistance:
    • Up to 4% of loan amount as a grant
    • Up to 5% as a zero-interest second mortgage
  • Income limits: Vary by county (approx. $146,000 for 1–2 person households in Denver Metro)
  • Credit score: 620+
  • Mortgage insurance: Depends on primary loan type (conventional PMI, FHA MIP, USDA guarantee, etc.)
  • Requirement: Must complete a CHFA-approved homebuyer education course

10. Super-Jumbo & Specialty Loans

Designed for ultra-luxury Colorado homes ($2M+), non-warrantable condos, or self-employed borrowers.

  • Loan amounts: Typically $2M–$3M+
  • Down payment: 20%–30%
  • Credit score: 720+
  • Mortgage insurance: Not available; large equity requirements instead

Colorado Mortgage Insurance Rules (Quick Guide)

  • Conventional Loans (PMI): Required with <20% down; can be removed at 80% LTV or automatically at 78% LTV
  • FHA Loans (MIP): Always required; lasts for life of loan if down payment <10%, or 11 years if ≥10% down
  • VA Loans: No mortgage insurance required
  • USDA Loans: Guarantee fee required upfront and annually for the life of the loan
  • Jumbo/Specialty Loans: Usually no PMI option; larger down payments required

Whether you’re a first-time homebuyer in Colorado, looking at FHA or VA loan programs, or exploring CHFA down payment assistance, understanding how mortgage insurance impacts your payments is just as important as choosing the right loan type.

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