FHA loans in Colorado

If you’re weighing how to finance a home in Colorado, an FHA loan can offer a lower down payment and flexible credit. Because loan limits vary widely by county, understanding how FHA loans work – and where your county’s limit falls – can help you budget before you shop. With an FHA loan, Colorado homes can be more affordable for more buyers.

What are FHA loans?

FHA loans are government-backed mortgages for borrowers that offer low down payments, low closing costs, and easy credit qualification. FHA loans are insured by the Federal Housing Administration, which means the agency reimburses lenders if the borrower defaults. This backing helps lenders offer FHA loans to borrowers who may not qualify for a conventional loan.

How do FHA loans work?

FHA loans have specific rules that help make them more accessible than many conventional options. FHA loan requirements include steady income, a minimum credit score, a minimum down payment, property requirements, and a maximum loan amount that varies by county. FHA loan rates are competitive and often lower than for other loan types.

FHA loan limits are set each year by the Department of Housing and Urban Development, and vary by county within each state, including Colorado.

FHA loans can be used to buy various property unit types with 1 to 4 units, including houses, condominiums, townhouses, and mobile or manufactured homes.

Properties must meet FHA guidelines, and borrowers must pay an up-front and an annual mortgage insurance premium (MIP). This insurance protects the lender if the borrower defaults and is part of what allows lenders to approve buyers with lower credit scores or smaller down payments.

Anyone who meets the requirements and agrees to live in the home they're buying as their primary residence can qualify.

What are the 2026 FHA loan limits in Colorado?

FHA loan limits change every year, and Colorado's limits vary by county based on local housing prices. Areas with higher home values qualify for higher limits, while lower-cost counties stay closer to the national floor.

The limits are based on median home prices in each county, up to 150% of the national conforming loan limit. Exceptions are made for homes in Alaska, Hawaii, Guam, and the U.S. Virgin Islands due to the higher construction costs.

For 2026, the FHA loan limits for a one-unit home range from $541,287 in low-cost areas to $1,249,125 in high-cost counties.

Here are the FHA loan limits by county in Colorado for buying 1- to 4-unit homes.  Use the HUD lookup tool to confirm your county’s current limit, then speak with a loan officer to see what you can qualify for.

FHA loan requirements

Requirements for FHA loans can vary by lender and by program, so the guidelines below reflect what you can generally expect through Rocket Mortgage. It’s always best to check with your lender to confirm the exact qualifications for your situation.

The chart below outlines what you’ll usually need to qualify for an FHA mortgage in Colorado, including the minimum down payment, credit score, debt-to-income ratio, income, appraisal, and inspection, and more.

FHA loan down payment assistance programs in Colorado

Down payment assistance programs can help bridge the gap for buyers who qualify for an FHA loan but need help covering the up-front cost. DPA programs typically offer grants, forgivable loans, deferred-payment loans, or low-interest second mortgages that can be applied to your down payment or closing costs.

Colorado has several DPA programs, each with its own income limits, credit requirements, and guidelines. Many buyers use these programs to reduce the amount they need to bring to closing or to make home buying more feasible when savings are limited.

Colorado Housing and Finance Authority

The Colorado Housing and Finance Authority (CHFA) offers grants and second mortgages to help eligible buyers cover their down payment or closing costs. Most programs require a minimum credit score, income within set limits, and completion of a home buyer education course. The grant doesn’t need to be repaid, while second mortgages come with low or no interest, depending on the program.

To apply, buyers typically work with a CHFA-approved lender who will verify eligibility, walk through program options, and help complete the required education and documentation.

Colorado Department of Local Affairs Down Payment Assistance

The Colorado Department of Local Affairs partners with local agencies to provide down payment support for qualifying buyers. Programs often prioritize first-time home buyers, and some initiatives include additional support for first-generation buyers. Income limits vary by region, and applicants usually need to complete home buyer education through an approved provider.

Most buyers apply by working with a participating lender or local housing agency. They’ll review your income, credit, and home buyer status, then help you determine which program best fits your situation.

Colorado Housing Assistance Corp.

The Colorado Housing Assistance Corp. (CHAC) provides low-interest, deferred-payment loans to help with down payments and closing costs. Programs generally serve first-time home buyers with moderate incomes and often require a small contribution from the buyer, along with completion of a home buyer education course.

Applications are typically submitted directly to CHAC or with support from your lender. A housing counselor reviews your financial profile, confirms eligibility, and guides you through the steps needed to secure assistance.

Pros and cons of buying a Colorado home with an FHA loan

Like any other mortgage, buying a home in Colorado with an FHA loan has its pros and cons.

Pros

• Low down payment requirements. FHA loans allow qualifying buyers to put down as little as 3.5%, which can make homeownership more realistic when you're trying to balance savings with rising housing costs. This lower threshold gives buyers more room to move forward sooner, rather than waiting to save a larger down payment.
• Flexible credit standards. Lenders can approve borrowers with a 580 score for the minimum down payment, and those with scores between 500 and 579 may still qualify with 10% down. This gives buyers with thin credit files or previous financial setbacks more flexibility.
• Higher loan limits in many Colorado counties. Some parts of Colorado, especially mountain and resort areas, qualify for significantly higher FHA loan limits. This can give buyers more room to purchase in counties where prices exceed the state average, but still need a loan program with more forgiving requirements.
• Ability to use down payment assistance programs. FHA loans work well with Colorado’s down payment assistance programs, including CHFA, DOLA, and CHAC. Buyers who combine these resources can reduce up-front costs and keep more cash available for moving expenses, reserves, or early repairs.

Cons

• Mandatory mortgage insurance. FHA loans require up-front and annual MIP, which adds to the overall cost. For buyers planning to stay in the home long-term, this ongoing expense can make the loan more expensive than a conventional mortgage.
• Property standards can affect eligibility. Homes financed with FHA loans must meet specific safety and condition standards. In Colorado’s older housing stock or rural areas, this can limit the number of homes that qualify without repairs.
• Lower loan limits in some counties. Although some Colorado counties qualify for high FHA limits, many rural or lower-cost areas are at the national floor. Buyers looking for larger or newer homes in those regions may find the limit too low and may need to weigh other loan types.

FAQ

Here are answers to common questions about FHA loans in Colorado.

What if I need more than the FHA loan limit?

When the FHA loan limit isn’t enough, the next step is exploring conventional financing or a jumbo loan. It helps to compare jumbo loan rates with today’s typical 30-year mortgage rates to see what fits your budget. Buyers with military benefits should check VA loan rates, which may offer lower costs for higher-priced homes.

Can I use an FHA loan for an investment property?

You generally can’t use an FHA loan for an investment property, since FHA loans require the home to be your primary residence. You can, however, buy a two- to four-unit property, live in one unit, and rent out the others.

What is the downside of an FHA loan?

The biggest downside of an FHA loan is the ongoing mortgage insurance, which can make it more expensive than a conventional loan over time. It's a common concern among buyers when evaluating the pros and cons of FHA loans.

Is an FHA loan only for first-time buyers?

An FHA loan isn’t limited to first-time home buyer applicants. Anyone who meets the credit, income, and occupancy requirements can qualify.

What will disqualify you from an FHA loan?

You can be disqualified from an FHA loan if your credit score falls below 500, your DTI is too high, or the property doesn’t meet FHA minimum standards. Buyers looking into how to buy a house with bad credit often find FHA loans more forgiving, but there are still minimums you have to meet.

The bottom line: Using an FHA loan to buy a home in Colorado

An FHA loan can be a strong option if you’re looking for flexible credit requirements, a lower down payment, or added support through Colorado’s down payment assistance programs. Loan limits vary widely across the state, so having a clear sense of your county’s numbers and how they affect your budget can make the process feel more manageable.

Ready to apply for an FHA loan? Get preapproved today with Rocket Mortgage.

¹To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

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