Best Mortgages for First-Time Homebuyers in Southwest Colorado

(Your local guide to FHA, USDA, VA, and Conventional loan options.)

Happy first-time homebuyer couple standing in front of their new Colorado home with mountain backdrop.

Buying your first home in Colorado?

If you’re a first-time buyer, you’ve probably seen endless ads promising “fast approvals” and “instant prequals.” Most come from national call centers where the person answering might’ve gotten their mortgage license last month—or last week. The average loan officer in those shops has barely a year of experience, and it shows. They don’t understand Colorado’s market or the kinds of properties we actually have here.

Then there’s the other extreme: high-margin local lenders who advertise community ties but quietly bake in inflated rates and fees. That’s where we come in. At Montezuma Mortgage, we’re an independent Colorado mortgage broker, which means we shop wholesale rates across multiple lenders and usually beat both groups—the national call centers and the local banks—on price and performance.

Mountain homes, rural parcels, and mixed-use properties don’t scare us. We live here, we lend here, and we know how to get them done right the first time.

Top Loan Options for First-Time Buyers

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FHA Loans

The Federal Housing Administration (FHA) loan is one of the most popular options for new buyers.

• Down payment: 3.5%

• Credit flexibility: Ideal for moderate or limited credit histories

• Property standards: Must meet FHA minimum safety and condition guidelines

FHA loans are often the easiest entry point for first-time buyers who need a smaller down payment or more lenient credit standards. They also allow for gift funds and down payment assistance programs like CHFA or HomesFund to be layered in.

Blue and white banner with an icon of a farmhouse and silo on a hill beside bold text that reads “USDA Loans.”

USDA Loans

The USDA Rural Development program is an outstanding zero-down option—and it’s fully available in La Plata, Montezuma, Archuleta, and Dolores Counties. Every single one of these counties qualifies under USDA’s rural housing eligibility map.

• Down payment: 0%

• Mortgage insurance: Lower than FHA

• Location: Entire counties eligible in Southwest Colorado

• Debt-to-income ratios: Slightly more conservative than other programs

Because USDA guidelines are a bit stricter on debt ratios, this program works best when your qualifying income comfortably fits the home you’re targeting. If a spouse helps pay household bills but isn’t on the loan application, or if you’re stretching for a higher-priced home, FHA or Conventional may offer a little more flexibility.

Still, when your ratios fit, USDA loans offer one of the best overall values in home financing—no down payment, competitive rates, and lower monthly insurance costs.

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VA Loans

For veterans, active-duty service members, and eligible surviving spouses, the VA loan remains unmatched.

• Down payment: 0%

• Mortgage insurance: None

• Rates: Often below market average

• Funding fee: Waived for many disabled veterans

VA loans offer unmatched flexibility and cost savings, making them the best option for those who’ve served. We’re proud to help local veterans use this benefit to secure homes across Southwest Colorado.

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Conventional Loans

Conventional 97%, HomeReady, and Home Possible programs let buyers purchase with as little as 3% down while still benefiting from long-term savings.

• Down payment: 3%

• Credit score: Typically 620+

• Mortgage insurance: Can be removed once you reach 20% equity

Conventional loans reward good credit with lower insurance costs over time. They’re a smart choice for buyers planning to stay in their home for many years or who can combine Conventional financing with CHFA or HomesFund assistance.

Local & State Programs That Make Buying Easier

CHFA – Colorado Housing and Finance Authority

CHFA offers statewide down payment and closing cost assistance that can be combined with FHA, USDA, VA, or Conventional loans.

• Grants or second mortgage assistance

• Fixed-rate, fully amortized loan terms

• Designed for first-time and repeat buyers

HomesFund – Durango-Based Nonprofit

HomesFund, based in Durango, provides down payment assistance throughout La Plata, Montezuma, Archuleta, and Dolores Counties.

• Down payment assistance for income-qualified buyers

• Homebuyer education is required and provided by HomesFund

• Second mortgages with a monthly payment, and shared appreciation without a monthly payment

HomesFund programs can often be layered with FHA or Conventional loans, giving buyers the flexibility to reduce out-of-pocket costs while still choosing the best long-term loan structure.

MetroDPA

Serving much of the Front Range, MetroDPA provides down payment assistance up to 5% of the loan amount. Even though it’s focused on Denver Metro, it often sets the model for local and regional programs across Colorado.

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Why Work With a Local Broker

Both national lenders and local lenders have limitations.

Big national call centers lack local understanding, and their loan officers often have minimal experience. Local banks and Lenders know the area but usually have higher rates, and less flexibility.

At Montezuma Mortgage, we give you the best of both worlds:

• We shop dozens of wholesale lenders to find the most competitive rate and structure for your situation.

• We understand local underwriting quirks and appraisal challenges unique to Southwest Colorado properties—wells, acreage, water rights, mixed-use zoning, and rural areas.

• We coordinate directly with your agent and title company to keep deals moving quickly and cleanly.

• We blend programs like CHFA, HomesFund, and USDA to make tough deals work that banks will decline.

We’re independent, fast, and transparent—no call center scripts, no hidden margins, no surprises.

Ready to Find Your Best Loan?

Lower rate. Lower payment. Local expertise.