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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:

  1. 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.
  2. 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.
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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.

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The Mortgage Process

Blue Water’s mortgage loan process timeline involves a series of five steps, some of which require sitting down with one of our experts to analyze all aspects of your financial health. Here’s what you can expect:
Getting to Know You & Getting On Track
In our first meeting, we’ll answer your questions and talk about the programs we offer that would best fit your situation.
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Getting Pre-Qualified
The next step in the mortgage loan process is applying for pre-qualification, which enables us to confidentially verify your credit, income, assets, and liabilities.
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Assessing Loan Programs & Rates
At this point, we’ll start to sort through and evaluate which mortgage best fits your needs.
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Obtaining Loan Approval
Once you’ve submitted your loan application, we’ll work with our lenders to help find you the best rate and most favorable terms possible.
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Closing the Loan
After your loan is approved, we’ll review the details once more to make sure you feel confident about the financial commitment you are about to make. Once all of your questions are answered, we will schedule a closing.
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Please be advised that your actual rate, payment, and cost could be higher. Get an official Loan Estimate before choosing a loan. This estimate is provided for informational purposes ONLY, to assist you in determining an estimate of cash that may be required to close and an estimate of your proposed monthly mortgage payment. Actual charges may be more or less, and your transaction may not involve a fee for every item listed.

Rate and APR based on the following assumptions: Purchase Price of $250,000, loan amount of $200,000, 75% loan to value, 780 credit score, single family property, primary residence, escrowing taxes and insurance, debt ratio within program guidelines.

Rates posted are effective as of 4/17/2024.