FHA Loans in Colorado:
What They Cost, Who Qualifies, and What Most Articles Leave Out

If you've been reading about FHA loans in Colorado, you've probably noticed that most of what's out there reads like a bullet-point list copied from the FHA handbook. Minimum credit score: 580. Down payment: 3.5%. Great, now what?

The problem is those bullet points don't tell you what FHA loans actually cost over time, how Colorado's county-by-county loan limits affect what you can buy, or when an FHA loan stops being the best option and a conventional loan starts making more sense.

That's what this article is for. Not a sales pitch. Just a clear look at how FHA loans work in Colorado so you can figure out if one fits your situation.

What an FHA Loan Actually Is

An FHA loan is a mortgage insured by the Federal Housing Administration. The government doesn't lend you money directly. A private lender funds the loan, and the FHA insures it, which reduces the risk for the lender.

Because the lender has that insurance backing, they're willing to accept lower credit scores and smaller down payments than they would on a conventional loan. That's the core trade-off: easier qualification requirements in exchange for mortgage insurance costs.

One thing worth clearing up right away: FHA loans are not limited to first-time homebuyers. There's no such restriction in the program guidelines. If you've owned five homes before, you can still get an FHA loan on your next purchase (as long as it's your primary residence). The "first-time buyer" association exists because FHA's lower barrier to entry happens to appeal to people buying their first home. But it's not a requirement.

FHA Loan Requirements in Colorado

Here's what you'll need to qualify, along with some honest context about what these requirements actually mean in practice.

Credit Score

FHA guidelines allow:

• 580 or higher: Qualifies for 3.5% down payment
• 500 to 579: Qualifies with 10% down payment

Here's the catch: those are FHA's rules, not your lender's rules. Most lenders in Colorado set their own minimum credit score higher than the FHA floor. Many won't go below 620. Some will work with 580. Very few will touch 500.

So while you'll see "500 minimum credit score" repeated across dozens of websites, the reality is more limited. If your score is below 620, you'll want to ask specific lenders about their actual minimums before assuming you qualify.

Down Payment

The minimum is 3.5% of the purchase price, and the money can come from:

• Your own savings
• A gift from a family member
• Down payment assistance programs (more on this below)
• Certain employer assistance programs

On a $425,000 home, that's about $14,875. Not nothing, but significantly less than the 5% to 20% range you'd need for most conventional options.

Debt-to-Income Ratio

FHA guidelines allow a back-end DTI (all monthly debts divided by gross monthly income) of up to 43%, with some flexibility up to 50% for borrowers with strong compensating factors like cash reserves or a higher credit score.

This is more forgiving than many conventional loan programs, and it's one of the real advantages of FHA for buyers who carry student loan debt, car payments, or other obligations.

Employment and Income

You'll need a two-year employment history, though that doesn't mean two years at the same job. Gaps and job changes can be explained. Self-employed borrowers need two years of tax returns showing consistent income.

Property Requirements

The home must be your primary residence. FHA doesn't cover investment properties or second homes.

Colorado FHA Loan Limits: They Vary More Than You'd Think

FHA sets a maximum loan amount for each county, and in Colorado, the range is significant. This matters more than people realize. If you're looking at homes in both Weld County and Broomfield County, your FHA borrowing power could differ by nearly $300,000 depending on which side of the county line the house sits on.

Use the tool below to look up the 2026 FHA loan limits for any Colorado county:

Before you fall in love with a property, check the limit for the county it's in. A few minutes of research now can save you real frustration later.

The Real Cost of FHA Mortgage Insurance

This is where a lot of FHA articles either get vague or bury the details. Mortgage insurance is the biggest trade-off of an FHA loan, and you need to understand it clearly.

Two Types of FHA Mortgage Insurance

1. Upfront Mortgage Insurance Premium (UFMIP)

• 1.75% of the loan amount, paid at closing
• On a $400,000 loan, that's $7,000
• Most borrowers roll this into the loan balance rather than paying cash, so your actual loan amount becomes $407,000

2. Monthly Mortgage Insurance Premium (MIP)

• Typically 0.55% annually for most borrowers (divided into 12 monthly payments)
• On that same $400,000 loan, that's roughly $183/month added to your payment

The Part That Surprises People

If you put down less than 10% (which is most FHA borrowers), MIP stays on the loan for the entire life of the loan. It doesn't drop off when you hit 20% equity like conventional PMI does.

If you put down 10% or more, MIP drops off after 11 years.

This is a big deal over time. On a 30-year loan, you could pay over $65,000 in mortgage insurance if you never refinance. Compare that to conventional PMI, which typically cancels once you reach 78-80% loan-to-value.

When This Changes the Math

For some borrowers, FHA is still the best option even with lifetime MIP, because they wouldn't qualify for conventional at all (or would face a much higher interest rate due to their credit score).

For others, especially those with credit scores above 700 and at least 5% to put down, a conventional loan with PMI might cost less over time, even if the interest rate is slightly higher.

There's no universal answer here. It depends on your credit score, your down payment, how long you plan to stay in the home, and whether you might refinance in a few years.

Down Payment Assistance Programs That Work With FHA in Colorado

Colorado has several programs designed to help with down payments and closing costs, and many of them pair directly with FHA loans.

CHFA (Colorado Housing and Finance Authority)

CHFA offers down payment assistance in the form of a second mortgage, either a grant or a low/no-interest loan. Their programs work with both FHA and conventional first mortgages.

A few key details:

• Income limits apply and vary by county and household size
• Purchase price limits are set by county
• Homebuyer education is required (usually a few hours online)
• The assistance typically covers 3-4% of the purchase price, which can cover most or all of the FHA down payment

Other Local Programs

Some Colorado cities and counties offer their own assistance programs. Denver, Aurora, and several Front Range communities have had programs in recent years, though availability and funding change frequently.

The tricky part is that these programs layer. You might use CHFA's program for the down payment while your FHA loan covers the main mortgage. Each program has its own qualification criteria, and they don't always align neatly. Getting the details right before you start making offers matters.

FHA Property Standards: The Surprise That Kills Deals

FHA appraisals are different from conventional appraisals. The appraiser doesn't just estimate the home's value. They also inspect it against FHA's Minimum Property Requirements (MPRs).

Things that can cause problems:

• Peeling or chipping paint on homes built before 1978 (lead paint concern)
• Roof issues — if the roof has less than two years of remaining life, it may need to be replaced before closing
• Missing handrails on stairs or elevated areas
• Broken windows
• Non-functional systems — heating, plumbing, electrical must all work
• Foundation or structural problems
• Health and safety hazards like exposed wiring or standing water in crawl spaces

In Colorado, this comes up more often than you'd expect. Older homes in Denver's established neighborhoods, mountain properties with deferred maintenance, and rural homes outside city codes can all run into FHA appraisal issues.

This doesn't mean you can't buy those homes with FHA. It means the seller may need to make repairs before closing, or the deal might need to be restructured. It's worth knowing about upfront so you're not blindsided at the appraisal stage.

When FHA Makes Sense — and When It Doesn't

Here's a straightforward look at two different situations:

The point isn't that one loan type is always better. It's that the comparison depends on specifics that a generic article can't account for.

Frequently Asked Questions

What are the 2026 FHA loan limits in Colorado?

They vary by county. Most Colorado counties sit at the FHA floor of $541,650 for a single-family home. Denver metro counties, Boulder County, and several mountain counties go over $1,000,000. Other counties like Larimer fall somewhere in between. Use the county lookup tool above to find the exact limits for your area, including duplex, triplex, and fourplex limits.

What credit score do I need for an FHA loan in Colorado?

FHA's official minimum is 580 for a 3.5% down payment loan (or 500 with 10% down). But most Colorado lenders require at least 620, and some set the bar at 640. If your score is between 580 and 620, you'll need to shop around for a lender who works in that range.

Can I use down payment assistance with an FHA loan in Colorado?

Yes. CHFA and several local programs offer assistance that can be paired with FHA financing. These programs have income limits, purchase price caps, and education requirements. The assistance typically covers 3-4% of the purchase price, which can handle most of the FHA down payment.

How much is FHA mortgage insurance?

There are two parts: an upfront premium of 1.75% of the loan amount (usually rolled into the loan) and a monthly premium of about 0.55% annually. On a $400,000 loan, that's roughly $7,000 upfront and $183/month. For borrowers putting down less than 10%, the monthly premium lasts the life of the loan.

What are the downsides of an FHA loan?

The biggest one is mortgage insurance that doesn't go away (for most borrowers). FHA also has stricter property condition requirements, which can complicate purchases of older or as-is homes. And while FHA's rates are competitive, borrowers with strong credit often find conventional loans cost less over the long run.