Do You Have to Pay Back CHFA Down Payment Assistance in Colorado? (Grant vs. Second Mortgage)

If you are looking at CHFA down payment assistance in Colorado, one of the first questions is simple:

Do I have to pay this money back?

The answer depends on which CHFA assistance option you use.

CHFA offers two main down payment assistance options for eligible Colorado homebuyers using a CHFA first mortgage:

CHFA Down Payment Assistance Grant
CHFA Down Payment Assistance Second Mortgage Loan

The CHFA grant does not have to be paid back.

The CHFA second mortgage does have to be paid back, but repayment is usually deferred until a later event, such as selling the home, refinancing, paying off the first mortgage, or no longer using the home as your primary residence.

That difference matters. Both options can reduce the amount of cash you need upfront, but they do not work the same way.

CHFA grant vs. CHFA second mortgage

CHFA option	Assistance amount	Do you repay it?	Best fit
CHFA grant	Up to the lesser of $25,000 or 3% of your first mortgage	No	Buyers who want simpler repayment terms
CHFA second mortgage	Up to the lesser of $25,000 or 4% of your first mortgage	Yes, but later	Buyers who need more help upfront

You generally choose one option. You do not use both the CHFA grant and CHFA second mortgage together on the same CHFA first mortgage.

Which CHFA option should you ask about?

If you are thinking...	Ask about...	Why
�I want the simplest option and do not want to repay assistance later.�	CHFA grant	The grant does not require repayment.
�I need the most help possible with upfront costs.�	CHFA second mortgage	It may provide more assistance than the grant.
�I may sell or refinance soon.�	Grant first, then compare carefully	The second mortgage may need to be repaid when you sell or refinance.
�I can afford the payment but do not have much saved.�	Second mortgage	It may reduce the cash needed at closing.
�I do not understand the trade-off yet.�	Compare both with a CHFA-participating lender	The right answer depends on your rate, payment, cash needed, and future plans.

This is where many buyers get stuck. The option with the highest assistance amount is not always the best option. The right choice depends on your loan terms, monthly payment, savings, timeline, and how long you expect to stay in the home.

What is the CHFA grant?

The CHFA grant helps eligible buyers with down payment and/or closing costs.

The main benefit is clear: it does not need to be repaid.

That makes it appealing for buyers who want help upfront but do not want a second mortgage balance attached to the home.

The trade-off is that the grant usually provides a smaller amount of assistance than the second mortgage option. It may also come with a different interest rate than a loan without assistance, so buyers should compare the full monthly payment, not just the assistance amount.

A grant can be a good fit if you have some savings, want simpler terms, and do not need the maximum amount of help available.

What is the CHFA second mortgage?

The CHFA second mortgage can provide more assistance upfront.

It is a second loan that sits behind your main mortgage. The key point is that you usually do not make monthly payments on it. Repayment is deferred until a future trigger event.

Common repayment triggers include:

Selling the home
Refinancing the home
Paying off the first mortgage
No longer using the home as your primary residence

This means the second mortgage can make buying easier upfront, but it is not free money. It may reduce your cash needed at closing, but it can affect your equity later when you sell or refinance.

For some buyers, that trade-off is worth it. For others, the grant or another loan option may make more sense.

Is the CHFA second mortgage a bad thing?

No. A CHFA second mortgage is not automatically a bad thing.

A second mortgage can sound worrying because buyers often imagine a second monthly payment. With CHFA's second mortgage option, repayment is usually deferred.

For some buyers, that can make homeownership possible sooner.

The question is not just:

�Can I get more assistance?�

The better question is:

�Does this option help me buy safely, with a payment and repayment terms I understand?�

The second mortgage may be a good fit if you need more help upfront, plan to stay in the home for a reasonable period, and understand what happens when you sell or refinance.

The grant may be a better fit if you want simpler repayment terms and do not need as much help upfront.

What happens if you sell the home?

If you used the CHFA grant, there is generally no grant repayment required.

If you used the CHFA second mortgage, selling the home can trigger repayment. The second mortgage balance may need to be paid from the sale proceeds at closing.

This does not mean the program was a bad choice. It just means the assistance needs to be understood before you buy.

For example, if you received CHFA assistance through a second mortgage and later sell the home, that second mortgage may be paid off along with your main mortgage. This can reduce the amount of equity you receive from the sale.

That is why buyers should ask about repayment before closing, not years later when they are ready to sell.

What happens if you refinance?

If you used the CHFA grant, repayment is usually not the issue.

If you used the CHFA second mortgage, refinancing may trigger repayment. In some cases, there may be ways to keep the second mortgage in place, but buyers should not assume that will happen automatically.

This is especially relevant if you are thinking:

�I'll buy now, then refinance later if rates drop.�

That may still be possible, but the CHFA second mortgage needs to be part of the conversation. Before choosing the second mortgage option, ask your lender what would happen if you refinance in the future.

Does CHFA mean you can buy with no money saved?

Not usually.

CHFA assistance can reduce the cash needed at closing, but buyers should still expect to have some money available.

You may still need money for:

Earnest money
Home inspection
Appraisal
Minimum borrower contribution
Moving costs
Cash reserves
Closing costs not covered by assistance or seller concessions

CHFA currently requires borrowers to make a minimum financial contribution toward the purchase. Seller concessions may also help reduce the cash needed, but they depend on the seller, the loan type, the contract, and program rules.

The practical takeaway is simple: down payment assistance can make buying much more realistic, but it does not always mean buying with zero dollars out of pocket.

Can seller concessions help with closing costs?

Yes, seller concessions may help reduce the amount of cash you need at closing.

Seller concessions are when the seller agrees to pay some of the buyer's closing costs as part of the purchase contract. This is separate from CHFA down payment assistance.

In some cases, a buyer may be able to use CHFA assistance and seller concessions together to reduce upfront costs. The exact structure depends on the loan type, program rules, seller negotiation, and lender approval.

This is one reason your real estate agent matters. The offer needs to be written correctly, and the seller needs to agree to the concession.

Do you need the CHFA class before getting pre-approved?

Usually, no.

You generally do not need to complete the CHFA homebuyer education class before getting pre-approved. But if you use a CHFA loan, you do need to complete a CHFA-approved homebuyer education class before closing.

It is smart to take the class early. Waiting until you are under contract can add stress and may delay closing if the certificate is not ready in time.

The class can also help you understand the homebuying process, budgeting, loan terms, closing costs, and the responsibilities that come with owning a home.

Do you need a CHFA first mortgage?

Yes.

CHFA down payment assistance is used with CHFA first mortgage loan programs. You do not usually take any mortgage from any lender and then add CHFA assistance separately.

You work with a CHFA-participating lender. That lender checks your eligibility, reviews your loan options, and explains which CHFA programs may fit your situation.

CHFA does not qualify buyers directly. The lender does that work.

Basic CHFA requirements buyers should know

CHFA program details depend on the loan type, income, property, county, lender guidelines, and current program rules.

In general, buyers should expect questions around:

Credit score
Income limits
Debt-to-income ratio
Homebuyer education
Minimum borrower contribution
Property location and property type
Whether the home will be your primary residence
Whether you qualify under lender underwriting rules

Meeting one requirement does not guarantee approval. A lender still needs to review the full file.

Before you choose, ask these questions

Before choosing the CHFA grant or second mortgage, ask your lender these questions:

What would my interest rate be with the grant?
What would my interest rate be with the second mortgage?
How much cash would I need at closing with each option?
What would my monthly payment be with each option?
What happens if I sell the home in a few years?
What happens if I refinance later?
Can seller concessions reduce my closing costs?
Are there any other Colorado assistance programs I should compare?

These questions matter because the option with the most assistance is not always the best option.

A grant may be simpler because it does not need to be repaid. A second mortgage may give you more help upfront, but it can affect what happens later if you sell or refinance.

The best choice is the one that gives you a realistic path into the home with a monthly payment and repayment terms you understand.

Why your lender and real estate agent matter

CHFA is not just a form you fill out at the end.

Your lender needs to know the CHFA program requirements. Your real estate agent needs to understand how the assistance affects the offer, timeline, seller concessions, and closing process.

This matters because the wrong team can create delays or confusion.

A good team should help you understand:

Which CHFA option fits your situation
How much cash you may actually need
What your monthly payment could look like
Whether seller concessions may help
What happens if you sell or refinance
Whether another Colorado assistance program may be a better fit

For many buyers, the program itself is only one part of the plan. The structure of the offer, the lender's experience, the timing of the class, and the cash-to-close estimate all matter.

Which option is better?

There is no single right answer for every buyer.

The CHFA grant may be better if you want no repayment requirement and only need a smaller amount of help.

The CHFA second mortgage may be better if you need more help upfront and are comfortable with repayment being due later.

Here is the simplest way to think about it:

Buyer priority	Option to compare first
Avoid repayment later	CHFA grant
Reduce upfront cash as much as possible	CHFA second mortgage
Sell or refinance soon	CHFA grant, then compare carefully
Stay in the home longer	Either option may work
Need the lowest possible monthly payment	Compare CHFA and non-CHFA loan options

The right option is the one that helps you buy with a payment you can afford and terms you understand.

Main takeaway

If you are using CHFA down payment assistance in Colorado, repayment depends on the option you choose.

The CHFA grant does not need to be paid back.

The CHFA second mortgage does need to be paid back, but repayment is usually deferred until a future event such as selling, refinancing, paying off the first mortgage, or no longer using the home as your primary residence.

Both options can be useful. The best choice depends on your income, credit score, location, savings, monthly payment, and long-term plans for the home.

Before choosing, compare the grant, the second mortgage, seller concessions, and any other assistance options that may be available.

Need help comparing the CHFA grant and second mortgage?

If you are buying your first home in Colorado, we can help you compare the CHFA grant, CHFA second mortgage, seller concessions, and other down payment assistance options.

The goal is not just to get approved. The goal is to understand:

How much assistance you may qualify for
How much cash you may need at closing
What your monthly payment could look like
What you may owe later if you sell or refinance

Start by checking your eligibility, and we can help you understand which path may make the most sense.