If you are buying in Colorado and the down payment is the thing standing in your way, an FHA loan is usually the first real door that opens. It is a government-insured mortgage built for buyers who have steady income and a workable credit profile but not a pile of cash — and in a state where the median price has spent a decade climbing faster than wages, that describes a very large number of qualified people.
This page covers what FHA actually requires in Colorado, the 2026 county loan limits, what closing costs really run here, and the one FHA feature that costs borrowers the most money when nobody explains it.
FHA Loan Requirements in Colorado
FHA’s rules are set federally, so they do not change between Denver and Durango. What changes by county is how much you can borrow.
| Requirement | What FHA allows |
|---|---|
| Credit score | 580 for 3.5% down. Between 500 and 579, 10% down is required. Individual lenders may hold a higher floor than FHA does. |
| Down payment | 3.5% with a 580+ score. It may be gifted by a family member with proper documentation. |
| Debt-to-income | Commonly up to 43%, and higher with compensating factors such as reserves or a strong payment history. |
| Occupancy | Primary residence only. FHA will not finance a second home or a pure rental. |
| Property | 1–4 units, and the home must pass an FHA appraisal that checks condition as well as value. |
That last line matters more in Colorado than people expect. FHA appraisers flag peeling paint, missing handrails, roof life and well or septic issues. On an older Denver bungalow or a mountain property, condition can become the obstacle rather than your file.
Not sure whether your score and savings are enough?
We will tell you where you actually stand before you start touring homes — including the honest answer if FHA is not your best option.
2026 FHA Loan Limits by Colorado County
FHA caps how much you can borrow, and the cap is set county by county based on local prices. Colorado’s 2026 limits for a single-family home run from $541,287 in the lowest-cost counties to $1,249,125 at the top of the range.
| Area | 2026 single-family FHA limit |
|---|---|
| Denver metro — Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties | $862,500 |
| High-cost resort counties | up to $1,249,125 |
| Lowest-cost counties (statewide floor) | $541,287 |
Two practical notes. The Denver metro limit is a single shared number across ten counties, so moving from Denver to Elbert County does not change your ceiling. And if the home you want sits above the county limit, FHA is simply the wrong tool — a conventional or jumbo structure is the conversation instead. Limits are reviewed annually, so confirm the current figure for your county before you write an offer.
What Closing Costs Actually Run in Colorado
This is the question we get asked most often and the one buyers are most frequently surprised by. Closing costs are separate from your down payment, and in Colorado they typically land somewhere around 2% to 5% of the purchase price depending on the lender, the title company and your county’s recording fees.
What is in that number:
- Lender charges — origination, underwriting, credit report
- Third-party costs — appraisal, title insurance, settlement fee, recording
- Prepaids and escrows — the first year of homeowners insurance, plus property tax and insurance reserves collected at closing
- FHA upfront mortgage insurance — 1.75% of the base loan amount, which is usually financed into the loan rather than paid in cash
Two things specific to Colorado are worth knowing. First, seller concessions are common right now — the market has shifted enough that asking the seller to cover part of your closing costs is a normal negotiation rather than a long shot, and FHA permits a seller contribution of up to 6% of the sale price toward those costs. Second, if you are buying new construction inside a metropolitan district, the property tax figure on the listing often understates where the mill levy is headed — and your escrow and your qualifying ratios are built on the real number, not the listed one. Ask about the district before you fall in love with the house.
FHA Mortgage Insurance — and the Trap Nobody Explains
FHA loans carry mortgage insurance in two parts. Upfront MIP is 1.75% of the base loan amount. Annual MIP currently ranges from roughly 0.15% to 0.75% depending on your loan size, term and down payment; most buyers putting the minimum 3.5% down on a 30-year loan land at about 0.55%, dropping to roughly 0.50% with 5% down.
Here is the part that costs people real money: on most modern FHA loans with less than 10% down, the annual mortgage insurance lasts the life of the loan. It does not fall off at 20% equity the way private mortgage insurance does on a conventional loan. Plenty of Colorado homeowners have been paying it for years assuming it would eventually disappear on its own.
It is not permanent, though — it is just not automatic. Once you have built roughly 20% equity, refinancing from FHA into a conventional loan eliminates the mortgage insurance entirely, and the monthly saving often exceeds what a rate improvement alone would deliver. We walk through exactly how that works in escaping FHA mortgage insurance.
Not at 20% equity yet, or your credit has slipped since you bought? You still have an option. An FHA streamline refinance replaces your FHA loan with a new one, usually without an appraisal and with no equity minimum. It keeps the mortgage insurance, but it can lower what you pay each month while you build toward a conventional refinance later.
None of that makes FHA a bad choice. It makes FHA a very good entry loan with a planned exit, and knowing the exit up front is the difference between a smart decision and an expensive surprise.
FHA or Conventional? The Honest Comparison
FHA is usually the better fit when your credit score is in the 580–680 range, when your down payment is close to the 3.5% minimum, or when your debt-to-income ratio is tight enough that conventional underwriting pushes back.
Conventional usually wins when your score is above roughly 700 and you can put down 5% or more, because private mortgage insurance is cheaper at strong credit tiers and — critically — it is removable once you reach 20% equity. If you are close to the line, the two should be priced side by side rather than assumed. That comparison is most of what we do on a first call, and it is laid out further on our conventional loan page.
FHA for First-Time Buyers in Colorado
FHA is not restricted to first-time buyers, but it pairs well with Colorado’s down payment assistance programs, and that combination is where it gets genuinely powerful. CHFA and several metro-level programs can help cover the down payment or closing costs alongside an FHA first mortgage. Stacking assistance generally requires a higher credit score than FHA alone — commonly 620 — and each program has its own income and purchase-price limits.
Worth saying plainly, because almost nothing written for first-time buyers acknowledges it: the average first-time buyer in Colorado is now in their early forties. If you have been renting longer than you planned, you are not behind — you are typical, and you are probably a stronger file than you think. More on that in our Colorado first-time buyer guide.
Frequently Asked Questions
What credit score do I need for an FHA loan in Colorado?
580 qualifies you for the 3.5% down payment. Scores from 500 to 579 can still work with 10% down. Individual lenders may require more than FHA’s floor, which is one reason shopping across several lenders matters at the lower end of the range.
How much is the FHA loan limit in Denver?
$862,500 for a single-family home in 2026. That figure is shared across the ten-county Denver metro area, including Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties.
How much are closing costs in Colorado?
Typically around 2% to 5% of the purchase price, separate from your down payment. FHA allows a seller to contribute up to 6% of the sale price toward your closing costs, which in the current market is a realistic thing to negotiate for.
Does FHA mortgage insurance ever go away?
On most FHA loans with less than 10% down, annual mortgage insurance lasts the life of the loan and does not drop off at 20% equity. The usual way to remove it is refinancing into a conventional loan once you have built sufficient equity.
Can I refinance an FHA loan without an appraisal?
Usually, yes. An FHA streamline refinance is typically done without an appraisal and has no loan-to-value limit, as long as the loan is at least 210 days old, you have made at least six payments and your recent payment history is clean. It lowers the payment but does not remove mortgage insurance. How the FHA streamline works.
Can I use an FHA loan for an investment property in Colorado?
No. FHA requires the home to be your primary residence. You can, however, buy a 2–4 unit property with FHA, live in one unit and rent the others — which is a legitimate way to start building a portfolio.
Can I get an FHA loan if I am self-employed?
Yes, with two years of documented self-employment income. If your tax returns show little income after deductions, FHA may not be the strongest route — a bank statement loan qualifies on deposits instead of net taxable income and is often the better fit.
How We Work With FHA Buyers
We are a brokerage, not a single lender, which matters most on FHA files at the edges. Lender overlays on top of FHA’s own rules vary widely — one lender’s 620 floor is another’s 580, and treatment of collections, student loan payments and gift funds differs more than most borrowers realize. When your file is straightforward, FHA pricing is fairly similar everywhere. When it is not, shopping it is the whole value.
We will also tell you when FHA is the wrong answer. If your credit and savings support conventional, that is usually the cheaper path over the time you will own the home, and we would rather say so on the first call than put you in a loan with permanent mortgage insurance you did not need.
Find out what you qualify for — FHA or otherwise
A real pre-approval, not an instant estimate. We will price FHA against conventional side by side so you can see which one actually costs less for your situation.
Or call (720) 782-8348 and talk to a person.
Related Colorado Mortgage Resources
- Colorado First-Time Home Buyer Guide
- CHFA Loans and Down Payment Assistance in Colorado
- Conventional Loans in Colorado
- Escaping FHA Mortgage Insurance
- FHA Streamline Refinance in Colorado
- Colorado Closing Costs, Line by Line
- Denver Mortgage Broker
- Colorado Springs Mortgage Broker
Loan limits, mortgage insurance rates and program guidelines are set by FHA and are reviewed periodically; confirm current figures for your county and situation. Mango Stock Mortgage is a licensed mortgage brokerage, NMLS #2815478. This is not a commitment to lend. All loans are subject to credit approval and full underwriting. Equal Housing Lender.
See what you qualify for
Tell us about the property and what you are trying to do. A licensed loan officer will come back to you within one business day with what is actually available — including when the answer is to wait.