CHFA Preferred is the conventional loan side of Colorado's state housing program. Lots of first-time buyers use it, and many agents think of it as the "first-time buyer conventional" option. But in Brian's published breakdown of CHFA's matrix, Preferred is open to repeat buyers too, so always check before you rule anyone out. Here's how I explain who it fits, how the "Plus" version adds help, and when FHA through SmartStep is the better call.
The short answer
Preferred is a CHFA first mortgage written as a 30-year fixed conventional loan by a CHFA participating lender. The "Plus" version adds CHFA's down payment help, usually as a deferred second mortgage. It tends to fit buyers with stronger credit, because conventional mortgage insurance is priced by credit score. Buyers with weaker credit often do better with FHA through CHFA SmartStep. The lender runs both and shows the buyer the monthly cost side by side.
Step by step
- Qualify first. Credit score, income, debts, savings, who's on the loan. See how to qualify a buyer before the lender.
- Look at the credit score. A buyer with higher scores is often a good conventional candidate. A buyer right at CHFA's floor may see better pricing on FHA. The lender decides.
- Ask about plans. Staying a long time? Selling in a few years? That changes whether a grant or second mortgage makes more sense. See CHFA grant vs second mortgage.
- Check limits on CHFA's site. Income limits are on CHFA's income limits page. Don't say a number out loud as if it's current. See CHFA income and price limits.
- Book the homebuyer class. Every borrower needs a CHFA-approved class before closing. Start it now. Details are on CHFA's homebuyer education page.
- Pick a participating lender. Find one on CHFA's lender finder. The buyer can choose any lender.
- Plan for condos. Conventional condo loans can need a project review of the HOA's budget, insurance and rentals. Ask the lender to check the building early.
- Ask for seller help. Closing cost credits are limited by the loan type. Work within those caps. See seller concessions.
Preferred vs SmartStep at a glance
| CHFA Preferred | CHFA SmartStep | |
|---|---|---|
| Loan type | Conventional, 30-year fixed | FHA, VA or USDA |
| Mortgage insurance | Private mortgage insurance, priced by credit | FHA upfront and annual premiums (FHA loans) |
| Often fits | Stronger credit | Modest credit, veterans, rural addresses |
| Down payment help | Plus version | Plus version |
Rules change. Confirm the current program matrix with a CHFA participating lender and at chfainfo.com.
A worked example (illustration only)
A buyer with good credit is looking at a $400,000 home. A conventional loan might need 3% down, which is $12,000. With Preferred Plus, a CHFA second mortgage sized as a small percent of the first mortgage could cover much of that. The seller pays part of the closing costs through a negotiated credit. The buyer brings CHFA's minimum contribution, which can sometimes come from a gift.
Illustration only. A lender sets the real terms. Conventional loans with less than 20% down carry private mortgage insurance, plus taxes, homeowners insurance and closing costs. CHFA assistance carries its own repayment rules and can come with a higher first mortgage rate. The annual percentage rate (APR) would differ from any note rate. This is not an offer of credit. Program rules change. Check current rules at chfainfo.com.
How to explain it to your client
"CHFA has a conventional loan called Preferred. With good credit, it can be cheaper each month than FHA because the mortgage insurance is priced on your score. The Plus version adds help with your down payment, which you pay back when you sell or refinance. A CHFA lender will run Preferred and the FHA version side by side, and you pick the one with the better total cost."
Watch-outs
- "First-time only" is a myth here. Check the current rules before you tell a repeat buyer no.
- Credit drives the price. A buyer at the floor may pay a lot more for conventional mortgage insurance. Let the lender compare.
- No cosigners. CHFA has required everyone on the loan to live in the home. A relative who won't live there can't sign to help. Confirm current rules.
- Condos take longer. HOA project review can add weeks. Start early.
- The second is a real lien. It comes due on sale or refinance. Say so up front.
- Don't quote rates or payments. Get the lender's written estimate.
Further reading
- CHFA Down Payment Assistance in Colorado on kennarealestate.com
- $1,000 Cash to Close on kennarealestate.com
This is training for real estate agents. It isn't legal, tax or lending advice. A licensed loan officer sets loan terms. Check with your managing broker.
Questions
Is CHFA Preferred only for first-time buyers?
Brian's breakdown of CHFA's matrix says no. Check the current rules with a participating lender.
What kind of loan is Preferred?
A conventional 30-year fixed loan written under CHFA's rules.
What does "Plus" mean?
It's the version that adds CHFA down payment help, usually a deferred second mortgage.
Is Preferred better than FHA?
Sometimes. It often wins with strong credit. The lender compares total monthly cost.
Can a parent cosign?
CHFA has not allowed non-occupant cosigners. A parent can usually give a documented gift instead.
Where do I check the income limit?
On CHFA's income limits page.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.