Credit score not quite where you’d like it? Savings a little thinner than you’d hoped before buying? An FHA loan might be the door that’s actually open to you right now, and it’s one of the most commonly used paths into homeownership for first-time buyers across Colorado.
FHA loans were built for buyers who don’t fit neatly into a conventional loan’s requirements. That includes a lot of people.
You might be a strong FHA candidate if:
None of this means you’re a riskier borrower. It just means your financial story doesn’t check every box a conventional lender wants, and FHA financing was designed exactly for that gap.
FHA loans allow a down payment as low as 3.5% if your credit score is 580 or above. If your score falls between 500 and 579, you can still qualify, but you’ll need to put down at least 10%.
On a $400,000 home, 3.5% down comes to $14,000, a considerably lower bar than the $80,000 that a 20% down payment would require on the same home. For many buyers, that difference is the whole reason FHA financing gets them into a home years sooner than they expected.
This is the part of FHA loans that catches people off guard, so it’s worth explaining clearly. FHA loans carry two kinds of mortgage insurance:
Unlike conventional PMI, FHA mortgage insurance usually stays for the life of the loan if your down payment was under 10%. The way most buyers get out of it is by refinancing into a conventional loan once they’ve built enough equity and their credit has improved. That’s a conversation worth having with Chris a year or two into the loan, not something to plan around on day one.
FHA loan limits vary by county and are updated annually based on local home prices. Colorado’s higher-cost counties, including several in the Denver metro area, carry limits above the national baseline. Because these numbers change and vary by location, the most accurate way to know your limit is to check with Chris directly for your specific county.
FHA loans are meant for primary residences, not investment properties or second homes. The property also has to meet minimum safety and livability standards, verified through an FHA appraisal. This isn’t usually a hurdle for move-in-ready homes, but it can complicate a purchase if you’re eyeing a fixer-upper with structural issues, an aging roof, or safety concerns. If that’s the situation you’re in, an FHA 203(k) renovation loan is worth discussing as an alternative.
The short version: FHA loans are easier to qualify for, conventional loans are usually cheaper long-term.
If your credit is strong and your down payment is solid, a conventional loan will likely cost less over the life of the loan since you can eventually drop mortgage insurance entirely. If your credit needs more time to build or your down payment is limited right now, FHA gets you into a home sooner, and refinancing later remains an option once your financial picture strengthens.
