Conventional Loans in Colorado (2026)

The 20% down payment is the most expensive myth in American real estate. It has kept more Colorado renters renting than any interest rate ever has. Here is what conventional financing actually requires, what mortgage insurance really costs, and when conventional beats FHA.

What “conventional” actually means

A conventional loan is simply a mortgage that is not insured or guaranteed by a government agency — so not FHA, not VA, not USDA. Most conventional loans are written to standards set by Fannie Mae and Freddie Mac so they can be sold on the secondary market, which is why the rules are broadly the same from lender to lender.

This is also why a CHFA loan is not a separate category from conventional. CHFA SmartStep and CHFA Preferred are conventional loans with CHFA's rate and assistance attached. The category and the program are different axes.

The real minimum down payment

Here are the actual floors:

• 3% — for qualifying buyers under the low-down-payment programs: Fannie Mae's HomeReady and Standard 97, Freddie Mac's Home Possible and HomeOne.
• 5% — the general conventional minimum for buyers who do not fit one of those programs.
• 10–15% — typical minimums step up for second homes and for two-to-four unit properties.
• 20% — not a requirement. It is the threshold at which private mortgage insurance stops being charged.

On a mid-priced Denver-area home, the gap between the 3% floor and the 20% myth is the difference between buying next spring and buying in six years. That is the entire reason this page exists.

Who the 3% programs are for

The low-down programs are not identical, and the differences decide which one your lender uses:

• HomeReady and Home Possible are income-limited, tied to area median income for the property's location. They typically offer reduced mortgage insurance coverage, which is a real monthly saving — not just a lower down payment.
• Standard 97 and HomeOne generally require at least one first-time buyer on the loan and are not income-limited in the same way.
• Homebuyer education is commonly required, and it usually satisfies the requirement for assistance programs at the same time. Do it once, use it twice.

Notice the pattern: the income-limited programs give you the better mortgage insurance. A buyer who is comfortably under the local limit and does not get put into HomeReady or Home Possible is paying more than they need to. Ask about them by name.

PMI: what it costs, and how it ends

Private mortgage insurance is what a conventional lender charges when you put down less than 20%. Two things about it are widely misunderstood.

First, it is priced to you. PMI is not a flat rate. It is calculated from your credit score, your loan-to-value ratio and the loan program, which means two buyers on the same house with the same down payment can pay noticeably different amounts. Moving your credit score up a tier before you apply can be worth more per month than shaving a quarter point off your rate.

Second, it ends. On a conventional loan:

• The servicer is generally required to terminate PMI automatically once your balance reaches 78% of the original value, assuming you are current.
• You can typically request cancellation at 80% — and requesting it is faster than waiting for the automatic trigger.
• Depending on the servicer's rules and the age of the loan, an appraisal showing appreciation can support removal earlier, based on current value rather than the original purchase price.

That last point matters in a metro that has appreciated. Buyers pay PMI for years without ever asking whether their equity position already cleared the threshold. Put a calendar reminder two years out and check.

Conventional vs FHA: the honest comparison

This is the decision most Colorado buyers actually face, and the answer turns on credit.

• Stronger credit generally favors conventional. PMI priced to a good score can cost less than FHA's mortgage insurance, and — the bigger point — it can be removed. FHA mortgage insurance on modern loans generally lasts the life of the loan, which means the only exit is a refinance.
• Weaker credit or a higher debt-to-income ratio generally favors FHA. FHA is more forgiving on both, and the cheapest loan you cannot get approved for is not cheap.
• Down payment is close to a wash. 3% conventional versus 3.5% FHA is not the deciding factor. The monthly insurance and its permanence is.

Ask your lender for both, side by side, with the monthly payment and the total cash to close on each. Any lender who will not produce that comparison in a day is telling you something.

Move-up buyers: using the equity you already have

A large share of conventional borrowers in this metro are not first-time buyers at all — they are people sitting on equity in a home they have outgrown, trying to work out how to move without owning two houses or renting in between. The realistic options:

• Sell first, then buy, with a post-closing occupancy agreement letting you stay in the home briefly after closing. This is the cleanest financially and the most common approach in a market where buyers have some leverage.
• Buy first using a HELOC drawn on your current home for the down payment, then repay it when the old house sells. Set this up before you list — a HELOC is much harder to get on a home that is already on the market.
• Make the purchase contingent on your sale. Weaker than a clean offer, but far more viable now than it was in the frenzy years. In the right situation on the right listing, it works.
• Bridge financing — expensive, and occasionally exactly right when the timing gap is short and the numbers are large.

Which one fits depends on your equity, your income and how much risk you can tolerate on the sale side. This is one of the few genuinely strategic decisions in a transaction, and it is worth a conversation before you talk to anyone about a specific house. If you are also weighing whether to sell at all, start with a free home value estimate.

Credit, DTI and the thing that actually disqualifies people

Conventional loans want a mid-600s score or better in most cases, and the pricing improves in tiers as you go up. But the down payment is rarely what stops a Colorado buyer. Debt-to-income is.

Car payments and student loans compress your approved purchase price far more aggressively than most buyers expect. If you are six months out, paying down a car loan will usually move your buying power more than saving the same amount toward a larger down payment. Ask your lender to model both — it takes them ten minutes and it regularly changes people's plans. For the full picture, see how much income you need to buy in Denver.

Loan limits in Colorado

Conforming loan limits are set annually and are higher in designated high-cost counties — and Colorado has several, including parts of the Denver metro and the mountain resort counties. Above that limit you are into jumbo financing, with tighter credit, reserve and down payment requirements.

Because the limits are re-set each year and vary by county, confirm the current number for your specific county with a lender before you fix your price ceiling. Buyers routinely assume they are in jumbo territory when they are not.

Getting to near-zero out of pocket

Conventional itself will not go below 3%. But 3% plus assistance often lands close to nothing out of pocket:

• Stack down payment assistance — CHFA, metroDPA, or a local program can cover much of that 3%. See the full assistance guide.
• Negotiate seller concessions toward closing costs. In a market where sellers are competing again, this is back on the table.
• If you are eligible, use VA. Zero down and no monthly mortgage insurance is a better deal than anything on this page — see VA loans in Colorado.

My part in this is making the offer work once the financing is set: pricing it against real sold comps, structuring the concessions so they survive the appraisal, and getting the listing agent comfortable before the offer lands. Send me a price range and I will tell you what it actually takes to win at that number here.

Frequently asked questions

How much do you need down for a conventional loan in Colorado?

As little as 3% for qualifying first-time buyers using programs such as Conventional 97, HomeReady or Home Possible. The standard conventional minimum for other buyers is generally 5%. Twenty percent is not a requirement — it is simply the point at which private mortgage insurance is no longer charged.

What is a 3% down conventional loan?

It is a conventional mortgage written to a program that permits a 97% loan-to-value ratio. Fannie Mae's HomeReady and Standard 97 and Freddie Mac's Home Possible and HomeOne are the common ones. Eligibility depends on the program — some require first-time buyer status, some carry income limits tied to the area, and most require homebuyer education.

Is a conventional loan better than FHA in Colorado?

It depends on your credit. With stronger credit, conventional is usually cheaper over time because the mortgage insurance is priced to your credit profile and it can be removed once you have enough equity. FHA mortgage insurance is generally not removable on modern loans without refinancing. With weaker credit or a higher debt-to-income ratio, FHA is often the loan that actually approves.

How much is PMI in Colorado?

Private mortgage insurance on a conventional loan is priced on your credit score, your loan-to-value ratio and the loan type, so two buyers on the same house can pay very different amounts. Higher credit and a larger down payment both reduce it substantially. Ask your lender to quote it at a few different down payment levels — the results often surprise people.

When does PMI go away?

On a conventional loan, PMI is generally removed automatically once your loan balance reaches 78% of the original value, and you can typically request cancellation at 80%. Depending on the servicer and the loan's age, a new appraisal showing appreciation can also support removal. This is a meaningful advantage over FHA, where the insurance usually stays for the life of the loan.

Can you get a conventional loan with no money down in Colorado?

Not through the conventional program itself — the minimum is 3% for the low-down programs. You can get close to zero out of pocket by combining a 3% conventional loan with down payment assistance, and true zero-down financing is available through VA loans for eligible service members and veterans and USDA loans in designated areas.

What are conventional loan limits in Colorado?

Conforming loan limits are set annually and are higher in designated high-cost counties, several of which are in Colorado, including parts of the Denver metro and the mountain resort counties. Above the limit you are into jumbo financing with different requirements. Confirm the current limit for your specific county with a lender before you set your price ceiling.