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Colorado USDA Home Loans: Map & Zones, Income Limits, & More

USDA loans allow people to achieve the dream of home ownership in rural areas of Colorado. Learn more about these programs and how they can help you.

The real estate market is booming throughout Colorado. Several government-backed loan programs are available to help eligible people obtain financing to buy their dream homes. The U.S. Department of Agriculture (USDA) offers a program that provides mortgage loans for properties in qualifying rural areas, often with no down payment and relaxed credit requirements.

If you qualify for this program, it could be tremendously helpful to you. Read on to learn more about the requirements for USDA loans, the USDA loan eligibility map in Colorado, and how Fairway of the Rockies can help you.

What is a USDA home loan?

USDA home mortgage loans provide financing for properties in designated rural areas for the purpose of encouraging investment in those areas. Some loans come directly from the USDA. Private lenders issue other loans with the backing of the federal government. This government support allows lenders to issue loans to homebuyers who might not be able to qualify for conventional mortgage loans. USDA loans may require a minimal down payment, or no down payment at all, and may offer interest rates as low as 1%.

aerial shot of rural colorado roads through the mountains

The USDA has three main loan programs:

  • USDA direct loans come from the USDA itself.
  • USDA loan guarantees come from private lenders that participate in the USDA’s loan program.
  • USDA home improvement loans are available for improvements or repairs on eligible properties.

The USDA sets standards for both borrowers and properties for its home loan program:

  • Borrowers must meet income requirements for their area.
  • Properties must be within a designated rural area, as shown on a USDA loan map. Colorado has many designated areas outside of its major cities and towns.
  • Properties must also meet requirements set by the USDA that apply to the building itself, its utility infrastructure, and other features.

The USDA loan zones in Colorado include most of the state outside of major cities and towns. Areas in or near Denver and its suburbs, Colorado Springs, Fort Collins, Pueblo, Greeley, Boulder, Longmont, Loveland, Castle Rock, and Grand Junction are not eligible for USDA loans. Properties outside of these urban areas could be eligible.

What are the requirements for a home in Colorado to be eligible for a USDA loan?

Properties must meet minimum standards in order to be eligible for a USDA home loan in Colorado. These standards include:

  • Accessibility: The property must have access to a public road.
  • Structural integrity: The house and its foundation must be structurally sound enough that it is likely to endure for the term of the mortgage.
  • Roofing: The house’s roof must be sufficient to keep moisture out and enable the use of the house as a residence.
  • HVAC: The house must have adequate systems for heating and cooling. Central heating and air conditioning are not required, but if a house is equipped with this kind of system, it must be in good working order.
  • Water: The house must have a supply of water with enough pressure to handle the removal of waste, and the plumbing must be in good repair.
  • Electricity: The house must have an up-to-date electrical system that can handle typical functions of a home of its size. The system must be in good condition, without exposed or damaged wiring.

The borrower must intend to use the property as their residence. USDA loans are not available for investment properties. The complete list of requirements can be found in the Single Family Housing Policy Handbook published by the U.S. Department of Housing and Urban Development.

When a prospective borrower applies for a USDA loan, an appraiser will conduct an inspection of the property. They will either certify that the property meets the USDA program’s requirements, or they will notify the borrower and the seller of any deficiencies that they found. The seller may then have an opportunity to fix the problems.

What are the income limits for USDA home loans in Colorado?

The purpose of USDA loan programs is to help low- to middle-income individuals and families purchase their own homes. Borrowers are not subject to a minimum credit score requirement, but they do have to meet an upper limit with regard to income. The income limit varies according to the size of their household and where they live.

aerial shot of downtown Denver, Colorado
Image by David Mark from Pixabay

A person whose household has 1 to 4 people will have a lower income limit than someone with a household of 5 to 8 people. The income limit increases for each additional person after that. Income limits also increase for residents of more expensive areas.

The upper limit for Boulder, one of the most expensive areas in Colorado, is about $115,000 for a household of 1 to 4 people, and $152,000 for a household of 5 to 8 people. In Lamar, which reportedly has one of the lowest costs of living in the state, the limits are around $92,000 and $121,000.

aerial shot of downtown Denver, Colorado
Image by David Mark from Pixabay

What income counts towards the income limit?

The USDA counts most types of earned income when calculating whether your household meets the income requirements. This includes all wages, salary, tips, and commissions. Income from investments also counts. Sources of income that are not counted include:

  • Wages paid to a minor
  • Earned income tax credits
  • Unrealized gains, such as the appreciation of assets
  • Money or property received through inheritance

See What You’re Eligible For

If you are looking to buy a home in The Rocky Mountain Region, an experienced mortgage professional can help you find the right financing options. Fairway of the Rockies is here to help with USDA loans in Colorado. Get pre-qualified by filling out our short form.

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