CHFA Grant or CHFA Second Mortgage? Pick by How Long You Will Stay

Quick answer CHFA, the Colorado Housing and Finance Authority, gives Denver buyers two assistance structures, and you pick one per purchase. The grant (up to the lesser of $25,000 or 3% of your first mortgage) is never repaid, but it changes your first-mortgage rate. The second mortgage (up to the lesser of $25,000 or 4%) is 0% interest and deferred, but it comes due when you sell, refinance, or pay off the first mortgage. The right pick depends on how long you plan to stay: a short stay makes the repayment date matter more, a long stay makes your first-mortgage rate matter more. Get both quotes from your lender and compare them at your planned tenure. That comparison is the decision.

The worst CHFA mistake is not picking the wrong program. It is picking with only one quote.

Many Denver buyers who qualify for CHFA hear one number: up to $25,000. They stop there. But CHFA assistance is not one thing. It is two structures with opposite tradeoffs, and the structure you pick changes what your loan costs you over time. The programs page maps all four Denver down payment programs. This post answers the narrower question buyers actually ask next: grant or second mortgage, for me?

The two structures, side by side

	CHFA grant	CHFA second mortgage
What you get	Up to the lesser of $25,000 or 3% of your first mortgage	Up to the lesser of $25,000 or 4% of your first mortgage
Repayment	None. It is a true grant.	Deferred at 0% interest. Repaid when you sell, refinance, or pay off the first mortgage.
The cost	A higher rate on your first mortgage than a no-assistance loan.	The balance comes due at sale, refinance, or payoff. No monthly payment in the meantime. Your first-mortgage rate under this structure comes from your lender's quote: compare it against the grant quote, not against the 0% second mortgage.
Can you combine them?	No. One CHFA assistance structure per purchase.

Both structures pair with a CHFA first mortgage through a participating lender, both require a homebuyer education course, and both carry a 620 credit minimum with county income limits. The full limits and the other two Denver programs are on the Denver down payment programs page.

What $600,000 looks like under each cap

Take a $600,000 Denver home with a first mortgage near the price. The caps work out to $18,000 under the grant (3%) and $24,000 under the second mortgage (4%). Those are caps, not promises: your actual assistance depends on your first mortgage amount, and your lender confirms the number.

Notice what the caps hide. The second mortgage hands you more money up front, $24,000 versus $18,000. The grant hands you money you never repay. Which one leaves you better off is not decided by the bigger number. It is decided by the rate on your first mortgage and by when the second mortgage comes due. Both of those are quote-specific, which is why this post refuses to hand you a break-even year. Any post that names one without your quotes is guessing.

The three-quote comparison that actually decides it

Ask your lender for three numbers, all in writing:

Your first-mortgage quote with the CHFA grant, including the rate.
Your first-mortgage quote with the CHFA second mortgage, including the rate.
Your first-mortgage quote with no assistance, so you can see what the assistance itself costs.

Then run each quote to your planned tenure, not to 30 years. If you expect to sell or refinance within a few years, the second mortgage's repayment date lands inside your plan: that second-mortgage balance (in the $600,000 example, $24,000) comes back out of your proceeds. If you expect to stay put for a long time, compare what each structure's own first-mortgage rate costs you across every one of those years: the grant quote's rate is paid every year you hold the loan, and the second mortgage's 0% rate applies only to the second mortgage itself, not to your first mortgage. Same programs, opposite winners, decided by one fact about your life: how long you stay.

One more quote belongs in the comparison if you qualify: metroDPA, the City and County of Denver sponsored program, up to 5% of your first mortgage as a deferred 0% second mortgage, with a 640 credit minimum. Price it the same way. The cheapest assistance on paper is not always the cheapest assistance at your tenure.

Two questions buyers ask, answered straight

Does CHFA assistance cover closing costs too?

Ask your lender whether your assistance can apply to closing costs, and get the itemized estimate before you assume it covers everything. This post does not state the answer because it varies by program rules and lender confirmation.

What if my income is over the CHFA limit?

Then CHFA is not your program, and metroDPA's higher income ceiling may still fit. Check the programs page for the current limits before ruling anything out.

Buying in Denver and weighing CHFA? Ask Robert or call 303-529-1213. Bring your lender's quotes and he will walk the tenure math with you.

Program shapes and caps above follow CHFA's published program structures as summarized on the Denver down payment programs page. Limits, rates, and eligibility change; your participating lender confirms current terms before you rely on them. This is general education, not lending, tax, or legal advice. Related reading: the true monthly cost of a cheap Denver home.