Home Purchase Loans In Aurora

The housing market in Aurora, Colorado, is presently characterized by a high level of competitiveness. The prices of residential properties experienced a decline of 1.1% compared to the previous year, with an average selling period of 11 days in the market.

Purchase Loan Programs in Aurora

Aurora, Colorado, home buyers have various mortgage options to choose from. The most common among them are the following:

• Conventional – Conforming Loans

A conventional mortgage in Aurora, Colorado, is a home loan that is not federally insured. It often necessitates a higher credit score and down payment than government-backed loans such as FHA or VA. Conventional mortgages in Aurora generally adhere to the rules set by the larger financial industry, and they could be classified as conforming or non-conforming loans.

The main distinction between non-conforming and conventional-conforming loans is how closely they follow predetermined parameters. Loan limitations set by the Federal Housing Finance Agency (FHFA) are adhered to by conforming loans, whereas non-conforming loans exceed these limits. 

The 2023 conforming loan limits for Aurora, Colorado, are $787,750 for a single-unit home, $1,008,450 for a duplex, $1,219,000 for a triplex, and $1,514,950 for a quadplex.

Conforming loans typically have lower interest rates, reduced down payment requirements, and more streamlined underwriting procedures. Borrowers with a minimum 620 credit score, a two-year stable income, and a 5% down payment are typically eligible for a conforming loan; highly qualified individuals may qualify for a down payment as low as 3%. Non-conforming loans, on the other hand, typically have higher interest rates and stricter eligibility requirements due to the extra risk they provide to lenders.

• FHA Loans

A mortgage insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development, is an FHA loan in Aurora, Colorado. FHA loans, as opposed to conventional loans, are designed to assist applicants who may not qualify for conventional financing due to poor credit or insufficient down payment. The FHA insurance allows lenders to offer more accommodating terms, making homeownership more accessible.

The primary distinction between FHA and conventional loans is their structure and qualification criteria. Conventional loans are not federally guaranteed and necessitate higher credit scores and larger down payments. On the other hand, FHA loans are backed by government insurance, which allows for a lower down payment and more flexible qualification standards.

A minimum credit score of 580 for a 3.5% down payment or a minimum score of 500 for a 10% down payment is usually required for an FHA loan in Aurora, Colorado. Borrowers must also have a steady employment history and adhere to the debt-to-income ratio standards. In addition, upfront and annual mortgage insurance premiums and a property evaluation by an FHA-approved appraiser may be required.

The 2023 FHA loan limits for Aurora, Colorado, are $787,750 for a one-unit home, $1,008,450 for a two-unit home, $1,219,000 for a three-unit home, and $1,514,950 for a four-unit home.

• VA Loans

A VA home loan in Aurora, Colorado, is a mortgage available to American veterans, service members, and certain military spouses. Because the VA loan is guaranteed by the United States Department of Veterans Affairs (VA), lenders can provide better terms to qualified borrowers. VA loans are frequently appealing options for those wishing to buy a home with no down payment, no private mortgage insurance (PMI), and potentially lower interest rates.

There is no down payment required for VA loans, and you don’t have to pay for private mortgage insurance (PMI). Also, interest rates on VA loans are usually lower than those on other types of loans. The VA also limits how much lenders can charge for closing costs and lets borrowers add them to the loan amount, giving them more financial freedom.

The standards for a VA home loan in Aurora, Colorado, are consistent with federal guidelines. These typically include service requirements, which specify the length and type of duty in the United States military, National Guard, or Reserves. To demonstrate their service qualifications, veterans must obtain a Certificate of Eligibility (COE). The COE is available online or from a lender and acts as the official documentation for loan eligibility.

• Construction Loans

A construction home loan in Aurora, Colorado, is a form of mortgage used to fund the building of a new home. These loans are typically for a year and have variable interest rates that match the prime rate. They pay for the construction of your home, and once completed, you must refinance the construction loan into a standard mortgage or take another action, such as selling the home.

The primary distinction between a construction-to-permanent loan and a traditional two-time close construction loan is the number of closings and the transition to a permanent mortgage. A construction-to-permanent loan requires only one closing, with the construction loan automatically converting to a permanent mortgage once the home is built. A two-time close construction loan necessitates two closings: one for the construction period and another for the permanent mortgage changeover.

There are various benefits to a one-time close construction loan, often known as a construction-to-permanent loan. It provides the ease of a single closing, eliminating paperwork and closing fees. Furthermore, these loans lock in the interest rate at the outset, protecting against rate increases during construction. Finally, it allows for a smooth transition from a construction loan to a permanent mortgage, simplifying the homeowner’s financial landscape.

• Jumbo Loans

A jumbo mortgage in Aurora, Colorado, is a house loan that exceeds the Federal Housing Finance Agency’s (FHFA) conforming loan limits. Unlike traditional mortgages, Jumbo loans are not eligible for purchase by Fannie Mae or Freddie Mac, making them a riskier prospect for lenders.

Higher interest rates and stricter qualifying standards are common characteristics of jumbo mortgages. Lenders may demand a bigger down payment (often 20% or more), a good credit score (generally 700 or higher), and a low debt-to-income ratio of less than 45%. These loans may have less flexibility in terms, but they allow purchasers to borrow more money, allowing them to buy more expensive homes.

The fundamental benefit of a jumbo mortgage is that it allows people to finance more expensive properties that are beyond the reach of regular loans. This is especially advantageous in markets with high house values, such as Aurora, Colorado. However, the borrower must be prepared for intense financial examination and potentially higher monthly payments due to the enormous loan amount and higher interest rates.

• Non-Qualified Mortgage Loans

In Aurora, Colorado, a Non-Qualified Mortgage (Non-QM) is a mortgage loan that does not satisfy the Consumer Financial Protection Bureau’s (CFPB) guidelines for Qualified Mortgages. Unlike QM loans, non-QM loans do not require proof of the borrower’s capacity to repay, allowing for alternative income documentation and more flexible underwriting standards.

There are numerous types of non-QM loans, each with unique characteristics that cater to the requirements of different borrowers. These may consist of interest-only loans, loans with a debt-to-income ratio exceeding 43 percent, and loans with balloon payments. Some non-QM loans are designed for borrowers with irregular income streams, such as those who are self-employed or those with marginal credit.

Flexibility is the primary advantage of a non-QM loan over a conventional mortgage. Non-QM loans allow individuals who do not satisfy the stricter requirements of Qualified Mortgages to become homeowners. This is especially advantageous for borrowers with non-traditional income sources, low credit histories, or other circumstances that would ordinarily prevent them from qualifying for a conventional loan.

While non-QM loans provide greater flexibility, they typically have higher interest rates and may necessitate bigger down payments. Borrowers should thoroughly analyze the risks and consult a home loan specialist before pursuing a Non-QM loan, particularly in volatile areas such as Aurora, Colorado.

Apply for Aurora Home Purchase Loan

As a direct mortgage lender and servicer in Washington, Capital Home Mortgage Colorado has options for all mortgage requirements. Our knowledgeable mortgage team can assist you in selecting the most suitable loan program for your budget and needs. As all loans are unique, our loan officers provide clients with the resources, assistance, and flexibility necessary to select the appropriate mortgage program. 

Call (303) 226-1177 to speak with our Aurora Home Loan Specialists.