Financing home purchases with an FHA loan is one of the most effective ways to achieve homeownership when you have low credit or capital. An FHA loan Colorado is one of the best examples of that, given how expensive real estate can be in some counties in the Centennial State. If you can’t get approved for a conventional mortgage because of your credit, issues with the down payment, or an unconventional financial background, FHA loans can be your best pathway to owning a home.
At Defy Mortgage, we further streamline that pathway for first-time and experienced homebuyers. We provide 75+ non-traditional mortgage options, from FHA loans to P&L loans and bank statement loans. We’re experts in making the FHA loan process as simple and hassle-free as possible, tailoring each solution to fit perfectly with our clients’ financial needs.
Drawing from our vast industry knowledge, we’ve crafted this blog to provide you with information on the requirements and limits of FHA loans in Colorado. We’ll outline the eligibility criteria for an FHA mortgage in the state and explore the state-specific benefits available to qualifying home buyers.
Let’s get right into it.
Understanding FHA Loans in Colorado
Colorado’s real estate can be costly, but homebuyers can leverage government-insured loan like an FHA loan Colorado to maximize the chances of securing a home. You can also combine an FHA loan Colorado with the many state government assistance programs aimed at helping prospective homeowners.
As of 2024, the average home value stands at $550,511, making Colorado one of the most expensive states in the U.S. for homeownership. While US News ranks the state 8th in terms of median income, it holds the 39th for cost of living, with an average cost of living per year of $53,374 against its median income of $49,195. FHA loans are instrumental in surmounting these challenges by providing an affordable pathway supported by various government incentives.
The Basics of FHA Loans
FHA loans are government-backed mortgages intended to provide affordable financing options for American homebuyers. Insured by the Federal Housing Administration (FHA), FHA loans make homeownership more accessible, especially for those with limited savings, lower credit scores, or unconventional sources of income, who may struggle to qualify for conventional home loans.
Why Choose an FHA Loan Over Other Mortgage Options?
FHA borrowers enjoy several advantages that other mortgage loans do not have. Some of the most prominent ones are:
- Lower Down Payment: FHA loans allow homebuyers with limited savings to access various housing options with down payments as low as 3.5% of the home’s value.
- Government Insurance: Since FHA loans are government-insured, FHA lenders assume less risk. This makes it easier to qualify for these loans and get favorable terms.
- Accessible Even With Low Credit: Unlike conventional loans that often require higher credit scores, FHA loan programs accept borrowers with FICO scores as low as 500.
Although FHA loans can have more requirements than conventional loans, they involve significantly lower financial obligations than standard home loans.
FHA Loan Benefits for Colorado Homebuyers
FHA loans in Colorado can be paired with several benefits from the state government to make it even easier to purchase a home. Some of the most important ones are:
Down Payment Assistance
These programs help first-time homebuyers with down payments and closing costs. Additionally, they are available to those within low- to moderate-income brackets, even if they have previously bought a home. Organizations like the Colorado Housing and Finance Authority (CHFA) can give borrowers grants and second mortgages that can be paired with FHA loans to minimize out-of-pocket expenses.
Mortgage Credit Certificate
Colorado’s MCC program gives first-time homebuyers an annual tax credit of up to $2,000. This can provide substantial financial relief, especially if your FHA rates and mortgage insurance premiums strain your finances.
Energy Efficiency Incentives
Colorado provides substantial financial benefits for homebuyers who invest in energy efficiency upgrades. Programs like the Xcel Energy Efficiency Rebate Program and Energy Smart Colorado can give you cash rebates for purchasing energy-efficient appliances and upgrades.
You can finance these purchases with an FHA loan as well, in the form of FHA Energy-Efficient Mortgage Loans. Between the rebates and the lower utility bills, it’s possible to develop your home so that you end up with a net reduction in your overall financial burden.
FHA Loan Requirements for Colorado Residents
For approval of an FHA loan, borrowers must satisfy specific criteria. These criteria include the following:
Minimum Credit Score and Down Payment
The FHA recommends that borrowers have a minimum credit score of 580 to get the lowest down payment of 3.5%. Borrowers with credit scores between 500 and 579 can still be approved, but they will have to put at least 10% down.
Even with a very low credit score, an FHA loan still holds a significant edge over conventional loans, which typically require a 20% down payment. However, note that some lenders may enforce stricter guidelines and require higher credit scores than what the FHA recommends.
Property Eligibility and Inspection Guidelines
Not all properties are eligible for FHA loans. Borrowers must choose a property that is either a single-family home, a multi-family home, or an approved condo. The home must also pass an appraisal by an FHA-approved inspector to ensure that it’s safe and habitable, free of hazards and structural flaws.
Income and Employment Verification for Colorado Borrowers
Most lenders also ask for proof of income and employment before approving FHA loans. Nonetheless, the income criteria for FHA loan approval can be much more flexible than those for conventional loans. Generally, lenders look for proof of at least two years of consistent employment or self-employment for freelancers and business owners.
In addition, your Debt-to-Income ratio (DTI), which measures the ratio between your monthly income and monthly debt payments, must also be below a certain level. The FHA recommends maintaining it at 43% at most. While DTI limits depend on the lenders, given Colorado’s housing market, it’s best to try to lower your DTI as much as you can or meet the FHA’s general DTI guideline of 43%.
2025 FHA Loan Limits in Colorado
In 2025, FHA loan limits were increased throughout the US to account for rising median home prices. Let’s explore how this affected the FHA loan limits in Colorado.
How Loan Limits Vary by County
The Department of Housing and Urban Development (HUD), which oversees the FHA, calculates FHA loan limits annually using two key factors: the national conforming loan limits set by the Federal Housing and Finance Agency (FHFA) and the median home prices in each county.
The HUD sets a “floor” limit of 65% of the national conforming loan limit and a “ceiling” limit of 150%. They then target 115% of the median home price in each county for the county-specific limits. If 115% of the median home price in a county is lower than the floor limit, the floor limit will automatically be applied to it. Similarly, it will receive the ceiling limit if 115% of the median home price exceeds the ceiling limit.
Updates to Loan Limits for 2025
In 2025, some Colorado counties, such as Yuma and Conejos, adopted the HUD floor limits as their FHA loan limits, indicating that the median home prices in these areas are close to the floor limits.
Despite Colorado’s reputation for being an expensive state to purchase a home, many of the counties with these limits are among the least expensive in terms of the cost of living, as per Coloradans themselves. They could be worth looking into if you’re searching for affordable home markets in the state. Here’s a breakdown of the updated FHA loan limits in Colorado for 2025:
Colorado Counties | Units | |||
| Single | Duplex | Triplex | Fourplex | |
| ADAMS | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| ALAMOSA | $498,257 | $637,950 | $771,125 | $958,350 |
| ARAPAHOE | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| ARCHULETA | $498,257 | $637,950 | $771,125 | $958,350 |
| BACA | $498,257 | $637,950 | $771,125 | $958,350 |
| BENT | $498,257 | $637,950 | $771,125 | $958,350 |
| BOULDER | $856,750 | $1,096,800 | $1,325,800 | $1,647,650 |
| BROOMFIELD | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| CHAFFEE | $632,500 | $809,700 | $978,750 | $1,216,350 |
| CHEYENNE | $498,257 | $637,950 | $771,125 | $958,350 |
| CLEAR CREEK | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| CONEJOS | $498,257 | $637,950 | $771,125 | $958,350 |
| COSTILLA | $498,257 | $637,950 | $771,125 | $958,350 |
| CROWLEY | $498,257 | $637,950 | $771,125 | $958,350 |
| CUSTER | $498,257 | $637,950 | $771,125 | $958,350 |
| DELTA | $498,257 | $637,950 | $771,125 | $958,350 |
| DENVER | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| DOLORES | $498,257 | $637,950 | $771,125 | $958,350 |
| DOUGLAS | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| EAGLE | $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
| EL PASO | $517,500 | $662,500 | $800,800 | $995,200 |
| ELBERT | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| FREMONT | $498,257 | $637,950 | $771,125 | $958,350 |
| GARFIELD | $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
| GILPIN | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| GRAND | $747,500 | $956,950 | $1,156,700 | $1,437,500 |
| GUNNISON | $633,650 | $811,200 | $980,550 | $1,218,550 |
| HINSDALE | $498,257 | $637,950 | $771,125 | $958,350 |
| HUERFANO | $498,257 | $637,950 | $771,125 | $958,350 |
| JACKSON | $498,257 | $637,950 | $771,125 | $958,350 |
| JEFFERSON | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| KIOWA | $498,257 | $637,950 | $771,125 | $958,350 |
| KIT CARSON | $498,257 | $637,950 | $771,125 | $958,350 |
| LA PLATA | $655,500 | $839,150 | $1,014,350 | $1,260,600 |
| LAKE | $498,257 | $637,950 | $771,125 | $958,350 |
| LARIMER | $632,500 | $809,700 | $978,750 | $1,216,350 |
| LAS ANIMAS | $498,257 | $637,950 | $771,125 | $958,350 |
| LINCOLN | $498,257 | $637,950 | $771,125 | $958,350 |
| LOGAN | $498,257 | $637,950 | $771,125 | $958,350 |
| MESA | $498,257 | $637,950 | $771,125 | $958,350 |
| MINERAL | $498,257 | $637,950 | $771,125 | $958,350 |
| MOFFAT | $498,257 | $637,950 | $771,125 | $958,350 |
| MONTEZUMA | $498,257 | $637,950 | $771,125 | $958,350 |
| MONTROSE | $561,200 | $718,450 | $868,400 | $1,079,250 |
| MORGAN | $498,257 | $637,950 | $771,125 | $958,350 |
| OTERO | $498,257 | $637,950 | $771,125 | $958,350 |
| OURAY | $561,200 | $718,450 | $868,400 | $1,079,250 |
| PARK | $816,500 | $1,045,250 | $1,263,500 | $1,570,200 |
| PHILLIPS | $498,257 | $637,950 | $771,125 | $958,350 |
| PITKIN | $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
| PROWERS | $498,257 | $637,950 | $771,125 | $958,350 |
| PUEBLO | $498,257 | $637,950 | $771,125 | $958,350 |
| RIO BLANCO | $498,257 | $637,950 | $771,125 | $958,350 |
| RIO GRANDE | $498,257 | $637,950 | $771,125 | $958,350 |
| ROUTT | $1,012,000 | $1,295,550 | $1,566,050 | $1,946,200 |
| SAGUACHE | $498,257 | $637,950 | $771,125 | $958,350 |
| SAN JUAN | $517,500 | $662,500 | $800,800 | $995,200 |
| SAN MIGUEL | $1,045,350 | $1,338,250 | $1,617,650 | $2,010,350 |
| SEDGWICK | $498,257 | $637,950 | $771,125 | $958,350 |
| SUMMIT | $1,006,250 | $1,288,200 | $1,557,150 | $1,935,150 |
| TELLER | $517,500 | $662,500 | $800,800 | $995,200 |
| WASHINGTON | $498,257 | $637,950 | $771,125 | $958,350 |
| WELD | $560,050 | $716,950 | $866,650 | $1,077,050 |
| YUMA | $498,257 | $637,950 | $771,125 | $958,350 |
Some real estate experts expect housing prices to decrease in the latter half of 2024 due to increased inventory. This can mean lower interest rates and premiums, as lower loan amounts may be required to close on a home.
FHA Loan Colorado FAQs
What Are the New FHA Loan Limits in Colorado for 2025?
Loan limits vary by county, with higher limits in dense areas like Denver County and lower limits in rural counties like Yuma. Take a look at our breakdown of per-county FHA loan limits above to find the loan limits for a specific county.
How Do I Apply for an FHA Loan in Colorado?
Applying for a loan is done through FHA-approved lenders or mortgage brokers, such as Defy Mortgage. Ensure you meet the credit score, down payment, and property requirements to get approved with good terms.
Can I Use an FHA Loan for a Second Home or Investment Property?
FHA home loans are designed for primary residences, and the borrower must live in the property for at least 12 months. However, you can work around this by purchasing a multi-family property and living in one unit while renting out the others.
What Are the Benefits of FHA Loans for First-Time Homebuyers in Colorado?
Colorado FHA loans offer down payment assistance through CHFA, providing grants and second mortgages to help first-time buyers reduce upfront costs. Additionally, homebuyers benefit from tax credits through Colorado’s Mortgage Credit Certificate program and cash rebates for energy-efficient upgrades, which can be financed using FHA Energy-Efficient Mortgage Loans.
How Long Does the FHA Loan Approval Process Take?
Approval for an FHA loan can take anywhere from 30 to 60 days, depending on your chosen lender, the complexity of the application, and any pending requirements. Financial details such as credit score, DTI ratio, and income verification can also affect how soon your loan gets approved.
Key Takeaway
An FHA loan Colorado is one of the best options for home buyers in the state who may not qualify for conventional home loans or prefer not to use them. They come with lower down payment and credit score requirements, reducing the financial burden. When combined with the numerous benefits offered to first-time homebuyers in Colorado, purchasing a home in the state becomes much more manageable, despite the higher real estate prices.
If your credit score is above 580 and your DTI is below 43%, you’re very likely to be approved for an FHA loan. To further lower your out-of-pocket expenses and long-term debt, take advantage of programs such as down payment assistance and mortgage credit. The Colorado Housing and Finance Authority is one of the key providers of these benefits, so check with them to determine your eligibility for assistance.
Looking for an FHA lender with great rates and flexible terms? Consider Defy Mortgage. We provide a streamlined FHA loan experience to borrowers in several US states, such as Alabama, California, Colorado, Florida, Georgia, Oregon, Tennessee, and Texas.
