Saving for a down payment in Centennial can feel like the biggest hurdle. You might be able to afford the monthly payment, but the upfront cash keeps pushing your timeline. The good news is that real options exist to close that gap. In this guide, you’ll learn how down payment assistance works, which programs to explore in Centennial and Arapahoe County, and how these choices affect both your cash-to-close and monthly payment. Let’s dive in.
What down payment assistance is
Down payment assistance, or DPA, helps cover your down payment and sometimes closing costs when you buy a primary residence. In most cases, DPA comes alongside your main mortgage and is issued by a state agency, local government, nonprofit, or a participating lender.
Common structures you may see:
- Grant: You receive funds that do not need to be repaid. These are less common.
- Forgivable second mortgage: No monthly payment. The loan is forgiven after you live in the home a set number of years.
- Deferred 0% second mortgage: No monthly payment. You repay when you sell, refinance, or pay off the first mortgage.
- Repayable second mortgage: You make an additional monthly payment on the DPA. This affects your monthly housing costs and qualifying ratios.
Programs to explore in Centennial
CHFA statewide assistance
The Colorado Housing and Finance Authority is the primary statewide source for DPA and first‑mortgage options. You work through participating lenders, and you’ll likely complete a homebuyer education course. Programs usually have income and purchase price limits, plus a primary residence requirement.
Federal low down payment mortgages
Federal loans are not DPA themselves, but they lower your required down payment and can pair with local assistance for closing costs.
- FHA: Often 3.5 percent down. Requires mortgage insurance.
- VA: For eligible service members and veterans. Often zero down with specific eligibility rules.
- USDA: For eligible rural or suburban areas that meet property and income limits. Often zero down when the property qualifies.
Arapahoe County and City of Centennial options
Arapahoe County’s Housing and Community Development office may administer DPA using federal or state funds. Always confirm current availability, service areas, and eligibility. Check the City of Centennial for any city-sponsored assistance or partnerships that apply within city limits.
Nonprofit and lender programs
Community nonprofits and housing agencies sometimes offer targeted DPA for income-qualified or first-time buyers. Many lenders and credit unions also provide in-house assistance, lender credits, or “silent seconds” with specific rules. These are only available through that lender.
Other sources you can use
- Gift funds from family, with required documentation.
- Employer-assisted housing benefits, if offered.
- Retirement savings exceptions such as the federal first-time homebuyer IRA exception, which can allow up to $10,000 for a first home without an early withdrawal penalty. Taxes may still apply, so consult a tax professional.
- Seller concessions to help with closing costs, negotiated as part of the contract.
Who typically qualifies
Each program sets its own rules, but you will often see these filters:
- Household income limits that vary by size and county
- Purchase price limits
- Primary residence requirement
- First-time buyer rules, often defined as no homeownership in the past 3 years
- Minimum credit score and debt-to-income requirements
- Completion of a HUD-approved homebuyer education course
- Property type and condition rules
How DPA affects your numbers
To make this clear, here are two Centennial price examples. The interest rate and program amounts below are illustrative only. Always verify current numbers with CHFA, local housing offices, and your lender.
Townhome example at 400,000
Assumptions: 6.5 percent rate on a 30-year fixed first mortgage. Estimated closing costs of 3 percent, or 12,000.
Scenario A1 — You put 3.5 percent down (FHA-style):
- Down payment: 14,000
- Cash-to-close: 26,000 including closing costs
- First mortgage amount: 386,000
- Approximate monthly principal and interest: about 2,440
Scenario A2 — DPA covers the 3.5 percent down with a deferred 0 percent second:
- DPA amount: 14,000 for the down payment
- Cash-to-close: about 12,000 for closing costs
- First mortgage amount: 400,000
- Approximate monthly principal and interest: about 2,528
- Monthly difference vs A1: about 88 higher
Key takeaway: DPA lowers upfront cash but can raise the first mortgage amount, which increases monthly principal and interest. If the DPA is a repayable second, a separate monthly payment would also apply.
Single-family example at 650,000
Assumptions: 6.5 percent rate on a 30-year fixed first mortgage. Estimated closing costs of 3 percent, or 19,500.
Scenario B1 — You put 5 percent down:
- Down payment: 32,500
- Cash-to-close: about 52,000 including closing costs
- First mortgage amount: 617,500
- Approximate monthly principal and interest: about 3,900
Scenario B2 — DPA covers 4 percent, you cover 1 percent:
- DPA amount: 26,000. Your down payment: 6,500
- Cash-to-close: about 26,000 after applying DPA
- First mortgage amount: about 643,500
- Approximate monthly principal and interest: about 4,066
- Monthly difference vs B1: about 166 higher
What this means for you:
- DPA reduces the barrier of upfront cash-to-close, often the biggest hurdle.
- When DPA replaces your cash down, the first mortgage grows, so monthly P&I usually increases.
- Deferred or forgivable seconds do not add a monthly payment but are repaid at sale or refinance, or forgiven over time per program terms.
- Repayable seconds add a monthly payment and impact qualifying ratios.
Steps to get started in Centennial
- Check eligibility basics. Review your household income, the price range you are targeting, and whether you meet any first-time buyer definitions.
- Take a homebuyer education course if required. Many programs require a HUD-approved class before closing.
- Get preapproved with a CHFA-participating lender. Ask for side-by-side scenarios with and without DPA to compare cash-to-close and monthly payment.
- Confirm property eligibility. Make sure the home type, price, and location fit the program’s rules.
- Reserve assistance when required. Some programs need reservations or approvals before closing.
- Close with confidence. DPA funds are typically wired at closing as a second mortgage or credited to your cash requirement.
Documents you may need
- Recent pay stubs and W-2s
- Bank statements and identification
- Social Security numbers for applicants
- Signed purchase contract
- Certificate of completion for homebuyer education, if required
Timing and what to watch for
- Funding cycles: Some programs have limited funds and open or close during the year. Start early.
- Liens and refinance: Many DPA loans are recorded as second liens. Understand if and when they must be repaid at sale or refinance.
- Mortgage insurance: Low down payments often require PMI on conventional loans or mortgage insurance on FHA loans. Include these costs in your comparisons.
- Rate trade-offs: Some lender DPA products raise the first-mortgage rate to cover assistance costs. Ask for a rate and fee comparison.
- Program restrictions: Most DPA is for primary residences, not second homes or investment properties. Some condos or property conditions may have limits.
- Gift funds: Follow your lender’s guidelines for gift letters and documentation.
- Taxes: Retirement withdrawals may have special rules. Consult a tax professional for your situation.
Local guidance you can trust
Down payment assistance can unlock homeownership in Centennial, but the details matter. The right plan balances your cash today with a sustainable monthly payment. If you want help mapping out CHFA options, verifying Arapahoe County and City of Centennial programs, and modeling real numbers for your price range, reach out. I can connect you with participating lenders, help you compare scenarios, and negotiate seller credits when the market allows.
When you are ready to take the next step, connect with Michael Gordon for calm, local, and coach-like guidance from search to closing.
FAQs
What is down payment assistance for Centennial homebuyers?
- DPA provides funds for your down payment and sometimes closing costs when you buy a primary residence in Centennial, typically as a grant or a second mortgage paired with your first mortgage.
Does DPA lower my monthly mortgage payment?
- Usually no. DPA reduces upfront cash, but if it replaces your down payment, your first mortgage is larger and your monthly principal and interest often increase.
Can I combine CHFA assistance with FHA, VA, or USDA loans?
- Often yes. Federal loans reduce the required down payment, and DPA can help cover down payment gaps or closing costs, subject to each program’s rules and lender underwriting.
What price points did the examples use for Centennial?
- The guide used a townhome at 400,000 and a single-family home at 650,000 with a 6.5 percent illustrative interest rate to show cash-to-close and monthly trade-offs.
Will DPA delay my closing in Centennial?
- It can if funding is limited or reservations are required. Start early, complete education, and work with a lender who can reserve funds and coordinate the timeline.
Do I have to be a first-time buyer to use DPA?
- Many programs target first-time buyers, defined as no homeownership in the past 3 years, but some options allow exceptions or target specific populations. Always check current rules.
