CHFA grant vs CHFA second mortgage — Denver scenario broken down
Colorado's CHFA offers two DPA structures: a grant up to 3% (truly free money) and a second mortgage up to $25,000. The right choice depends on your cash position, your timeline, and your loan amount.
The CHFA Preferred Plus Grant
CHFA Preferred Plus structures the DPA as a true grant — no second mortgage, no lien, no repayment. The cost: the first mortgage rate runs 0.5%-0.75% above the standard CHFA rate. Lender absorbs the grant cost through that rate spread.
On a $400K Denver purchase with 3% grant, you get $12,000 in immediate cash help. The trade-off: a higher monthly payment for the life of the loan.
The CHFA Second Mortgage
CHFA's second mortgage variants offer up to $25,000 in assistance as a 0% interest second with no monthly payment. The balance is due when you sell, refinance, or pay off the first mortgage. Some variants forgive over 5 years.
First mortgage carries the CHFA HFA rate — typically 0.5-0.75% lower than the grant version. Lower monthly payment, larger DPA, but the second lien sits on title until paid.
Denver $400K scenario — side by side
| Item | Grant (Preferred Plus 3%) | Second Mortgage $25K |
|---|---|---|
| Loan amount (first) | $388K | $388K |
| First mortgage rate | ~6.75% | ~6.25% |
| DPA amount | $11,640 grant | $25,000 second |
| Monthly P&I | $2,520 | $2,390 |
| 5-year P&I cost | $151,200 | $143,400 |
| DPA savings | $11,640 (no payback) | $25,000 (payback at sale) |
| 5-year net cost | $139,560 | $118,400 (still owe $25K at end) |
Which to pick
- Buy + sell within 3-4 years: Grant — second mortgage payoff would erase savings.
- Buy + hold 7+ years: Second mortgage — the lower rate compounds significantly.
- Cash-strapped at close: Second mortgage — more DPA to bridge the cash gap.
- Want lowest possible monthly payment: Second mortgage (lower rate).
- Want maximum simplicity: Grant — one mortgage on title, no second to subordinate.
Common questions
Can I refinance my CHFA loan with the second still in place?
The CHFA second can sometimes be subordinated to a new first mortgage. Confirm with CHFA at refi time.
Are these programs limited to first-time buyers?
Yes for most variants — defined as no homeownership in past 3 years. Some targeted-area exceptions exist.
Are mountain counties eligible?
Yes, but income and purchase price limits differ by county. Summit, Eagle, and Pitkin have higher limits than Denver.
What about CHFA SmartStep vs FirstStep?
Different variants with different income tier targeting. We map you to the program with the best fit before quoting.
How Mike + Cornerstone help
I'm Phoenix-based but licensed in Colorado. I structure CHFA scenarios for Denver, Boulder, and Colorado Springs buyers regularly. The grant vs second mortgage decision shifts the 5-year cost by $20K+ depending on your timeline. We model both before recommending.
Talk to Mike first Get pre-approved
No pressure, no commitment. Free 20-minute consult. Mike will look at your scenario and tell you straight whether this works for you.