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Conventional Home Loans in Colorado
What Is a Conventional Loan?
Conventional home loans are the most common type of loan for home purchases. While these private-sector loans are not backed by the government, they do follow the guidelines set by federally-backed mortgage institutions Fannie Mae and Freddie Mac.
Since there is no guarantee to the lender if the borrower defaults on a home loan, conventional loans often carry stricter requirements for approval than government-backed programs such as FHA and VA loans. Conventional mortgages can be very affordable over the long term if the borrower has good credit and enough cash on hand for a down payment.
Benefits of Conventional Home Loans in Colorado
Conventional mortgages offer a range of benefits to home buyers. Those opting for a conventional home loan in Colorado can take advantage of lower interest rates and more flexible terms and — if they can pay at least 20% down — forgo paying private mortgage insurance (PMI) over the entire lifetime of the loan.
Types of Conventional Loans
You’re considering applying for a conventional home loan — now what? First, it’s important to understand the different types of conventional loans. The two most popular conventional mortgages are fixed-rate loans and adjustable-rate mortgages (ARMs).
There are two key differences between fixed-rate loans and ARMs:
- Interest rate: While fixed-rate loans have a set interest rate that won’t change over the lifetime of the loan, adjustable-rate mortgages can vary over time, either rising or falling depending on the interest rate index.
- Loan qualification: Qualifying for an ARM may be easier than qualifying for a fixed-rate mortgage, especially for borrowers with higher debt-to-income (DTI) ratios.
ARMs and fixed-rate loans are similar when it comes to:
- Term lengths: Both conventional loan types offer the same term lengths, with 30, 20 and 15-year mortgages being some of the most popular.
- Credit qualifications: No matter which type of conventional home loan you select, you’ll need to prove your creditworthiness. Most conventional lenders consider “good credit” to be 700 or higher.
Whether you apply for a fixed-rate loan or an adjustable-rate mortgage, each loan type has its advantages depending on your personal circumstances and preferences.
For example, if you plan to sell your home in the near future, an ARM might be a better choice since you’ll pay lower interest rates initially. However, if you plan to be in your home for the long term, and you don’t anticipate sizable income increases in the future, then a fixed-rate mortgage may be a smarter option.
Conventional Loan Limits in Colorado
To keep pace with fluctuations in home values, the Federal Housing Finance Agency (FHFA) establishes conforming loan limits that are updated each year. These limits are typically set at 115% of the average home price in each geographic area.
In Colorado, the 2022 conforming loan limit for most counties is $647,200, although high-cost locations have a conforming loan limit of $970,800. These limits have increased by nearly 20% year over year from 2021 to 2022 thanks to rising home prices.
Refer to the chart below to see the conforming loan limits in Colorado by county.
| County Name | 1-Unit (Single-family Residence) | 2-Units (Duplex) | 3-Units (Triplex) | 4-Units (Multi-plex) |
| ADAMS | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| ALAMOSA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| ARAPAHOE | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| ARCHULETA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| BACA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| BENT | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| BOULDER | $747,500 | $956,950 | $1,156,700 | $1,437,500 |
| BROOMFIELD | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| CHAFFEE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| CHEYENNE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| CLEAR CREEK | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| CONEJOS | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| COSTILLA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| CROWLEY | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| CUSTER | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| DELTA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| DENVER | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| DOLORES | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| DOUGLAS | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| EAGLE | $862,500 | $1,104,150 | $1,334,700 | $1,658,700 |
| ELBERT | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| EL PASO | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| FREMONT | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| GARFIELD | $856,750 | $1,096,800 | $1,325,800 | $1,647,650 |
| GILPIN | $647,200 | $875,950 | $1,058,850 | $1,315,900 |
| GRAND | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| GUNNISON | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| HINSDALE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| HUERFANO | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| JACKSON | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| JEFFERSON | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| KIOWA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| KIT CARSON | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LAKE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LA PLATA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LARIMER | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LAS ANIMAS | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LINCOLN | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| LOGAN | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MESA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MINERAL | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MOFFAT | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MONTEZUMA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MONTROSE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| MORGAN | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| OTERO | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| OURAY | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| PARK | $684,250 | $875,950 | $1,058,850 | $1,315,900 |
| PHILLIPS | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| PITKIN | $856,750 | $1,096,800 | $1,325,800 | $1,647,650 |
| PROWERS | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| PUEBLO | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| RIO BLANCO | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| RIO GRANDE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| ROUTT | $678,500 | $868,600 | $1,049,950 | $1,304,850 |
| SAGUACHE | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| SAN JUAN | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| SAN MIGUEL | $756,700 | $968,700 | $1,170,950 | $1,455,200 |
| SEDGWICK | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| SUMMIT | $822,375 | $1,053,000 | $1,272,750 | $1,581,750 |
| TELLER | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| WASHINGTON | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| WELD | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
| YUMA | $647,200 | $828,700 | $1,001,650 | $1,244,850 |
Current Conventional Mortgage Rates in Colorado
As you begin your search for a conventional home loan in Colorado, keep in mind that conventional mortgage rates fluctuate from day to day. As of November 9, 2022, in Colorado, the current mortgage rate for fixed-rate mortgages is 7.24% for a 30-year loan and 6.47% for a 15-year loan.
Who Is Eligible for Conventional Loans?
To be approved for a conventional home loan in Colorado, you’ll need to meet several qualifications. Factors that can determine your eligibility include:
- Employment history: Borrowers are typically expected to demonstrate a minimum two-year job history, although borrowers with shorter employment histories may be approved if they can demonstrate proof of a stable job, income and other positive factors.
- Ability to make a down payment: While most conventional lenders only require a 3% down payment, borrowers who pay at least 20% down can avoid having to pay private mortgage insurance.
- Debt-to-Income ratio: Your DTI is the amount of monthly debt you have compared to your monthly income. If you have good credit, your DTI can be as high as 45%. However, for those with lower credit scores, the ratio may need to be as low as 36%.
- Credit score: Borrowers with credit scores of at least 700 are the most likely to be approved, although scores as low as 620 will be considered. Those with less-than-stellar credit will also need to have a lower DTI ratio.
Want to learn more? If you have questions about applying for a conventional home loan in Colorado or are interested in starting the process, reach out to an expert at Blue Water Mortgage today.
