Episode 013: Realtors Get Real: November 2022 and Down Payment Assistance Programs

Worried that you can’t afford a down payment on a home? Here’s some good news: This podcast episode will help you with that!

Get ready to join Dan and Ian with guest Sterling Coldani as they give you the latest housing market updates, trends, and predictions. They cover everything you need to know about buying, selling, and how to acquire down payment assistance programs as you navigate the housing market.

They'll be hitting you with facts, stats, and even some anecdotal evidence of what we see in the trenches of real estate today.

Key Takeaways: 

[6:35] How does refinance work?

[10:46] Is the market crashing, or is it just running slower than before? 

[11:22] "The market is not crashing. It's correcting."

[17:39] Sterling navigated the upside of a down payment assistance 

[22:18] Sterling explains what loan limits are 

[26:30] A strategic game plan on how you can enter the market 

[30:26] These types of programs are designed to help residents to have access to safe and affordable housing 

[50:01] Sterling lays out the H2O benefits 

Resources: 

Stay in touch with Ian Jimeno, Dan Guenther, and Sterling Coldani’s social media handles and follow them for more real estate with a dash of lifestyle goodness!  

Sterling Coldani 

Sterling’s LinkedIn Profile  

scoldoni@boemortgage.com 

Sterling’s Instagram 

951 445 9008 

Daniel Guenther 

Daniel’s Instagram 

Daniel’s Website 

Ian Jimeno 

Ian’s Instagram 

Ian’s TikTok 

Ian’s Youtube 

Ian’s Website 

Transcript

Dan: What is up everybody? Welcome to the Invest in Denver Podcast. This is Dan Guenther here with eXp Realty. I got a market update episode for you guys. It's currently December 6 right now. We're going to bring you some stats, some updates, what's happening in the market here in Denver, and hopefully provide some helpful information for you guys. Let's get into it, Ian.

Ian: Yeah, hopefully and definitely. This is the stuff that I wish I knew when I was a first-time homebuyer, investor, just starting out, or just real estate agent, just more curious about the market in general. Like what Dan said, we're just going to hit you with so many facts and stats, and even anecdotal evidence of what we're seeing here in the trenches as a real estate agent on The FI Team and eXp. We are joined again with Sterling Coldani himself. What's up, Sterling? How have you been?

Sterling: Hello everybody. Thanks for having me once again. It's an absolute pleasure.

Ian: Yeah, no joke, dude. Yesterday, on the fifth, I saw that you went out to the mountains. How was the sesh, the shred sesh?

Sterling: It was great. You really can't beat weekday skiing. I'm normally a weekend warrior. So, I got to be so lucky to go up on a Monday. By noon, my legs were shot. So, it was an excellent day.

Ian: Is that an age thing or a fitness thing?

Sterling: More of just like we put a lot of laps in. I wasn't the only one hurting.

Ian: I dig it. Nice. Well, I haven't gotten out of the season yet. I'm not as avid of the snowboarder's life skier, but definitely got to make some time out there. Anyhow, enough of the run stuff. I appreciate your guys' time. Let's hang out. Let's talk about the Denver Metro Real Estate Market Trends report of December 2022.

Talking about last month of November of 2022, thanks again to The Rueth Team for compiling all this information, putting it all on one PDF. Within what? 3 pages. I mean, this is all really good stuff. This podcast would not be as exciting if it weren't for you, Nicole Rueth. Thank you so much. A moment of silence for her. Not that she — anything bad happened, but more out of respect.

Dan: A shout out.

Ian: A shout out, that's the word.

Dan: They did such a good work. Ian, you know I took a class with her last month on exactly what she does for these things. The amount of detail they go into and the work they put in to do this is crazy. I can only hope to be half as good as her two to three years from now. So, big shout outs to the work they do at the team there.

Ian: Amen. Love it. I think I mentioned this earlier. I did unknowingly work with The Rueth Team. I think it was the seller was working with them. My gosh. It was such a smooth transaction. I only talked to her like once or twice, which was, if anything, if the transaction goes through. I had very little communication. I mean, that just shows you that they're on top of their stuff. So, I really appreciate that.

That being said, let's go right into the bullets. Active listings at month's end. As of right now, we're seeing approximately 6,253 active listings at the end of November of 2022, which is down approximately 14% from last month. So, I think it was around 7,200 in October of 2022 around Halloween time. Now we're at 6,253.

Dan: Keeping on that, Ian, as well, it's up 178% from a year ago where we had 2,000 listings last year. This time last year, I was looking at that. It's like, oh, wow. We're up almost 200% year over year, but not even close to where we need to be.

Ian: Yeah, dude. That's so good to point out. 180% year over year, which means it was probably like less than 3,000 last year in November.

Dan: 2,248.

Ian: Jesus Christ.

Dan: Yeah.

Ian: What a time to be alive.

Dan: Yeah.

Ian: I guess, I'm seeing this a little bit more, nowadays, with my buyers. As much as we're saying, like, hey, buyers out there — at least this is what I'm seeing on my side. Buyers out there, hey, you're going to be seeing some really good upsides with your transactions or your offers, from getting egress windows installed for free, extra seller credits about 3,600 from my most recent transaction. There are so many other things.

The thing is that with so little active listings at month's end compared to last month — at least, just like what I said, this is what I'm seeing — we don't know whether to be more patients or maybe even lower the, I guess, specific criteria that my buyers are looking for in a house, especially for my house hackers. If it doesn't come with a huge backyard, maybe a smaller backyard but it has everything you need in a house hack, maybe we go through with it. It also depends on what the timeline is for my buyers, too. So, what do you see, too, Dan? Is that as much of a problem as I'm making it out to be, or is that just me in particular?

Dan: No, honestly, I think we just have more options right now. It depends on what that client is looking for. Like, do they need to make this happen? I have some clients that are trying to make some tax things happen before the year end. Yeah, we have to be a little bit less aggressive. But if there's no pressure or no need to actually make this happen, then shit, let's take our time. Let's throw a lower offer in, and hope for some serious seller credits. It's possible. We're seeing it a lot.

Ian: I'm curious on the lending side, too, Sterling. I know with refinances happening so much more often back when interest rates were like sub 3%. Nowadays — maybe you'll get into that later on in this episode — they're not at sub 3%. So, refinances are a very few and far between these days. Is that something that you're seeing these days with buyers? How's work looking like on your end?

Sterling: Yeah, so, in response to refinances, I don't remember the exact number. But it's either in the '80s or the '90s, -90% year over year. They have dropped tremendously. Not saying it's still — a refinance can still be positive. If you have a bunch of equity in the home, and you need to pay off some debts, maybe taking that extra, that equity money out and paying down your debts is only raising your payment by $100. Maybe that's less than that credit card bills you were paying or less than the total amount of bills you're paying. You're able to get that debt off. There's still some good refi business to be had as long as it's bonafide, or, hey, you're taking out the equity to buy your next house hack. That's still a good refinance position, in my opinion.

Dan: So, we should not be carrying a balance of $20,000 on an 18% credit card. Is that what you're saying, Sterling?

Sterling: That's exactly what I'm saying, yeah. The percent to borrow money in the lending world is still fairly cheap compared to borrowing money on a credit card.

Dan: 100%.

Ian: No, 18%, dude. Not 100%.

Dan: No.

Sterling: Not yet. Never, dude.

Ian: For real. Going into some of the other statistics that are pretty interesting, in my opinion, is, for example, the close price, the median close price month over month. So, going into the end of November, we were looking at a median close price of about $565,000, which over the previous month it was about point .55% less than October, end of month.

Anything that you can say on that, Dan? I mean, .55% is not too significant. It's just like a small tick, if anything. But maybe that's just the seasonality thing rather than anything significant.

Dan: Yeah, I think this connects more to the fact that we're able to actually negotiate right now. Maybe it wasn't the exact same in October but also our close price to list price, which you're probably going to bring up next. But pretty much exactly the same, 98% close price to list price, which means we're getting about 2% under asking price.

I think that's having a big factor. Some people are actually offering over asking price right now in order to get more concessions, because a lot of people want less money out of pocket for closing costs. Some of the strategies that work for that way seems to be 5,000 more on the loan versus getting 5,000 back at the closing. It's helping a lot of people out in different ways. So, I honestly haven't really seen that much of a difference in overall prices. We have gone down quite a bit, but nothing drastically different from last month, in my opinion.

Ian: Comparing it to last year, I know you mentioned that. Seeing the year over year statistics, it's still really significant. How much of a change have we seen over the past 12 months? It is so crazy how much of a flip that is, right?

Dan: Yeah.

Ian: Going into year over year with the close median price, it is up approximately 4.63%. I guess, that's more exact and not approximate, at least, according to this. But up 4% from last year of this time, it just shows you that it's not just a seasonality thing. It really is just the state of the market. It's just constantly going up into the right, at least at this point in time.

So, until it's punctuated by some sort of COVID-related thing, we're just anticipating it going up to that way or up that way with these little blips of month over month. Maybe it might go down half a percent. But in general, it's going up and to the right.

Dan: I think something that I was hearing, I've been listening to podcasts. A lot of people are thinking the market is crashing. But when you go from a year over year, where we went up over 30% year over year, and then it goes down to 10, is the market crashing, or is it just slowing? Is it growing slower than it was before?

When you have such a big jump, it's really hard to compare. Even during the big recession of '08, the market was still appreciating a 3% on average. So, we might not be going up 20% year over year, as far as appreciation goes, but things are definitely still churning. The market is still going. I don't know about you, but I have plenty of people that are actively looking to buy and still making things happen.

Sterling: I was just going to say, it's the other C word, right? It's not crashing. It's correcting.

Dan: There you go.

Ian: I dig it. Staying on that same vein, I know you mentioned closed price over list price. For those of you who were not around last month, we'd like to have this statistic in here just because people need to know what the offers are looking like these days on the market, right?

If we're seeing a $500,000 purchase price, and you're putting in an offer at like 490, that is a 2% difference. So, you would see a close price over list price ratio of 98%, which is almost what we're actually seeing right now at the end of the November month. Right now, we're seeing that close price over list price ratio of about 98.32%. I did a little bit of the math. That's about $8,000 less than what they're asking for for the list price.

So, in summary, a lot of offers these days are seeing $8,000 less than what the list price is asking for. I know, for me, I'm definitely seeing that as well. The property that we have under contract with my current buyer, we have it at $15,000 less than what the ask price was. Yeah, $8000 is just the median or, I guess, the average over that time period. So, are you seeing the same thing, too, Dan?

Dan: Yeah, I was just going to add in on top of that. If we go back a year ago, it was almost the opposite. One year ago, in October, it was 101.6%. So, you were looking at 2% over asking on average a year ago, which in most situations, it was way more than that. No concessions. So, we've turned around quite a bit in one year.

Ian: Yeah, and I haven't been a real estate agent long enough to see like, okay, is 100% normal in the Denver market? Or is 101% normal? I mean, I want to say that's not normal. Or even 98%, is that even normal? What is normal? You would have to have so many data points in order for you to actually have conclusive evidence of what is a good market or not so good market, whether it leans to a certain buyer or a seller side.

I'm just seeing it, and it looks like it's steadily decreasing. Comparing to October of 2022, it's down approximately .4%, which means people are offering less than the asking price compared to last month. So, I don't know if you want to input anything on that, Sterling. But that's what we're seeing on our end for the close price over list price.

Sterling: I was just going to say people are getting their offers accepted on the first or second try, rather than the 10th or 20th try.

Ian: A lot of buyers are, including mine, once they see a property that they love, and they're still able to put down less than what the asking price is, it seems like a really big win to them. We got to thank the market for that.

Last thing I do want to put or say about the statistics is the days on the MLS, the median number for that. As of right now or the end of November, 22 days on the MLS for the median number. I know we say on average. But on median, is that a thing? I don't know if that's a thing.

Dan: Probably not. Try not to.

Ian: The median number or amount of days on the MLS at the end of November was approximately 22. Last month was 18. So, we are seeing increase of days on the MLS. That's approximately a 22% month over month increase. So, things are staying on the market. Maybe this is a seasonal thing as the winter months roll around. Sellers are just a little bit more apprehensive, or they're just letting it sit until maybe even springtime. It all depends on what the seller situation is, how desperate they want to get rid of it.

Sterling: Ian, was that the national average or Colorado average of days on market?

Dan: This is the Denver Metro.

Sterling: Okay. Perfect. Thank you.

Dan: Top 11 counties in the Denver Metro.

Sterling: Awesome.

Ian: Very local, very specific. That is our audience. Compared to a year ago, it was five days on the MLS for that median number. Like we said, and this has been the topic of the episode, things have changed from 12 months ago. So, we're not in Kansas anymore, people. We're in Denver. 2022.

With that being said, I know we have some really good information for you. The reason why we brought Sterling on here is he has some valuable information. We want to make sure that he's portraying this out into the world, the audience is getting the maximum value out of this podcast each and every time and every month. So, Sterling has definitely land on the law with this good stuff. He's going to be talking about some stuff that my buyers have been encountering as well, with down payment assistance programs and CHFA. I don't even know what that abbreviation means, but I know it's been helping out my buyers. So, I'll give the mic over to you, Sterling. What the heck is CHFA, and what is a down payment assistance program?

Sterling: Yeah, definitely. All right. So, I'm going to share my screen here. I'm going to go over a few of the down payment assistance programs that are offered here in Colorado. As always, make sure you talk to your lender, myself, Ian, or Dan. That way, we can make sure that we're putting you in the right program and taking down the correct information, so that we know you will qualify. So, let's get on.

Down payment assistance. So, what is DPA? DPA stands for down payment assistance, as we've been talking about. What DPA does is helps residents meet the minimum criteria for down payment amounts, as well as gives residents access to safe and affordable housing.

The first one, we're going to talk about CHFA. That's one of the most popular ones here in Colorado. CHFA will provide up to 4% in assistance, and it acts like a silent second lien against the home. It accrues no interest, which is nice, and is only due if you sell the house, refinance the house or when the note is due. That's normally 30 years. If you took a 30-year mortgage, it'd be 30 years. If you took a 15-year mortgage, it would be 15 years.

They also offer up to a 3% assistance in the form of a grant, and no repayment is required after three years. There's four different CHFA programs internally. One being CHFA Preferred. There is CHFA Preferred Very Low Income. There's CHFA SmartStep, and there's CHFA FirstStep. As you can see, there are lots of different programs where borrowers can fit in and leverage that to their benefit.

Ian: Real quick, Sterling.

Sterling: Yeah.

Ian: Going back to the other slide here. Looking at the up to 4% in assistance, and then you have that second bullet point of up to 3% in assistance for a grant, which means no repayment required. Is that 4%? You have to pay back the 4%, is what it sounds like. Can you add on these two? Can you have like 3% for down payment assistance, and then up to 4% just for any additional coverage, or maybe just to have that as a down payment? Can you use it for like furnishing or something like that?

Sterling: It all has to be part of the house. So, it's either your down payment or closing costs is where they're providing that money for. If they're giving 4% in assistance, and you can qualify for a 3% down loan, you can use that extra 1% to apply towards closing costs, which is nice.

Ian: Cool, thanks.

Sterling: Now we'll hit some of the chapter requirements. So, you must take a homebuyer education course. It is good for 12 months. They just recently made the course. Now you have to pay for it. So, you can either do an in-person one, which is free, or you could do it online and self-paced. I believe it's $75. However, it is good for 12 months. You will have to put $1,000 minimum contribution. So, that's out of your own pocket. But it can be a gift.

These are geared towards mostly first-time homebuyers. You can be considered a first-time homebuyer if with no ownership and a property within three years. So, if you sold a house four years ago, and you aren't on title or anything, then you can be considered a first-time homebuyer. There are certain programs inside of CHFA that are not restricted to first-time homebuyers. Like I said, make sure you talk with your lender, your realtor, to make sure that you're getting in the right program.

Dan: I think that's something super important to point out there. I think a lot of people here, "Hey, I'm a first-time homebuyer." If you bought a property, that does not necessarily mean that you're not a first-time homebuyer. I think the wording on that one is kind of confusing to a lot of people. Because I did not know that until a couple months ago when we were talking.

If you bought a home, you technically could still get a first-time homebuyer loan. I think that gets confusing with FHA loans as well for people. So, it's good to know. If you haven't owned a home in the last three years, you can still qualify for some of these programs, correct?

Sterling: Correct. In some of these other programs, if you had a divorce in your relationship, now they'll take that into account. You could be considered a first-time homebuyer even if it wasn't three years. There’re different caveats for each of these different programs.

There are income limits for CHFA. So, you can't make over $130,200 per year. It's also household income. So, be aware of that. It's not just the person on the loan, but they're taking into account everyone that is living in the home.

There's loan limit, so you can only go up to a certain amount in your loan that there will offer assistance on. Most of that is the conforming loan limit. CHFA hasn't come out with the new updated conforming loan limits. I'm sure once it gets posted, I'll probably get an email saying, "Yep, these loan limits have changed." But as of right now, it's the conforming loan limit of 647,200 lets you go on FHA, then it's based by the county.

Ian: Real quick, Sterling.

Sterling: Yeah.

Ian: With that loan limit, and getting like a 3% grant towards down payment, the borrower still has to get pre-qualified with their income as if they were going through a regular loan, right? So, this 3% assistance with the grant is granted if you are approved as a proper borrower through that lender, right?

Sterling: That is correct, yes. So, you have to hit all of these bulletin points here in order to be considered a CHFA borrower. First-time homebuyer being one of those. Homebuyer education course, you have to do that. So, there are just some things, some housekeeping that you, the borrower, have to do in order to enter into the program and also qualify for the program.

There are FICO requirements. You need a minimum FICO of 620. The house must be owner-occupied. So, you cannot use this as an investment property. Like I said, it takes into account household income. Everyone that's living in the house, they will have a profile for and take into account their income.

Dan: Just to clarify on that, Sterling. We're counting people that are connected with the borrower. Not like if you were house hacking and you had tenants or roommates, those would not be counted. Right?

Sterling: That is correct. Yep, that's correct. Just the borrower or—

Dan: Not just who's the people out there.

Sterling: Yeah, like I said, this must be an owner-occupied. Having roommates in, telling your lender that right off the bat may not be the best way. This is strictly for that certain person to get in. Yeah, you can strategically use this. But they're not taking into account your roommates yet, only that person on the loan.

All right. Some benefits of CHFA. One, essentially, your down payment is covered. Your DTI can be pushed higher than normal per AUS findings. Depending on your credit score, you can either go up to 50% DTI, or you can go up to 55% DTI. What's nice about that is your standard Fannie, Freddie, we're looking at 50% or AUS.

What AUS is our automated underwriting system. That extrapolates all the data from the file and will condition the file. So, if there's anything wonky, or something that we need to look at, or there's not enough funds, this program will tell us and condition us with that. Or if the DTI is too high, if we're looking at a condo and using CHFA, sometimes there's DTI limits for condos. Even though we can push you up to 55% with a FICO score of 660, it doesn't mean necessarily that it will be approved at that 55%.

So, make sure that you're running your AUS, and you're getting that approved, eligible, before putting in that contract. CHFA also has a lower MI fee. They set their own mortgage insurance rates, which is nice. You can use either the forgivable grant or the assistance as part of their program.

Ian: Why would anyone want to go through the assistance and not the grant? I mean, that's for your money.

Sterling: Yeah, with the assistance, you get, essentially, an extra percent in funds. Whereas the grant, you would get only up to 3%.

Dan: Can you use both, Sterling?

Sterling: No, you can only use the grant or the assistance, one or the other.

Dan: Okay.

Sterling: Lastly, strategic way to enter the market. If you're strapped with funds, or, hey, maybe this just makes better sense for you, and you're not having to come out of pocket with money, then, hey, this program is available to you. Use it.

So, we'll go into our next one — Metro DPA, our metro down payment assistance. This focuses on the Denver Metro area. It will provide up to 5% in assistance, and your second mortgage is forgivable after three years. It acts as a second, but is forgivable after three years.

Ian: What does that mean, forgivable?

Sterling: It means it's no repayment. So, if you stay in the house for three years after the note date, then that assistance goes away. You don't have to pay it back. The assistance for CHFA, you would have had to pay the assistance back either when you sell, refi, or when the note is due. This one is truly a grant.

Ian: Yeah, so, this 5%, you do have to pay it back a certain amount. But then after the third year, that second mortgage is white. It's no longer part of that mortgage or part of that monthly amount, right?

Sterling: Correct, yes. Each month, 136 of that loan amount gets taken out. So, if you were to sell the home in two years, you would only have to pay a year back of that assistance, not the full amount. Some of the Metro DPA requirements, which is different than the CHFA. There are income limits, but it'll let you go up to 176,700. So, a bit of a job.

Dan: I mean, that's a pretty income. I don't know about you guys.

Ian: Yeah.

Dan: That's doing pretty good.

Sterling: Yep.

Ian: I don't know if it compares to your teaching job though, Dan. I mean, you're making some big bucks there.

Dan: Very close to that. Divided by four.

Sterling: That's what you got paid quarterly?

Dan: No, yearly. You can buy an entire home in Minnesota for that. So, that's interesting.

Sterling: This program is geared towards those higher earners, if you will.

Dan: I think that's something to touch on to. A lot of people think that this is for lower income earners, but it's really not. It's for people that are just trying to buy their first home. The government wants people to own houses, because it's an asset. That's something that they want people to do.

Ian: I wonder if it's also — sorry, Sterling. I wonder if it's also because maybe with the threats. Ever since 2008, a lot of these bigger businesses, these corporations are buying up these single-family homes so that they're forcing renters to move in. Having that component added to it where Metro DPA wants local people to buy homes and stay in Denver rather than having some big monopoly, take 10% or whatever that percentage is of the supply of single-family homes so that they're limited to what they can buy. It's almost like they're choking that supply.

This is way for people to get in as soon as possible before, instead of assuming that they have to put down like 20% down, right?

Sterling: Yeah.

Ian: I think this is really good for the people that are local to the Metro Denver area.

Sterling: Yeah, or if they don't want to go live where the cows don't even want to live, if that's what they can afford. These programs are there to help the residents, like I said previously, have access to safe and affordable housing.

You have a minimum FICO requirement. You need a 640 plus. In this program, the DTI is capped at 45%. You also have to take a homebuyer education course, and it also must be owner-occupied.

Ian: So, DTI is a little bit lower than CHFA. CHFA was 50% to 55%. This is 45%.

Sterling: That's correct, yep. Hard cap at 45. Those higher income earners, theoretically, should have less debt and be able to afford more of a home. But that's not always the case. So, maybe a different program or maybe just going conventional might make better sense.

Dan: Call that lifestyle creep, Sterling. You make more, but you're spending all of it. So, technically, you're still broke.

Sterling: Yeah.

Ian: Yeah. For real,

Sterling: Which can happen.

Dan: Sterling, can I ask you real quick?

Sterling: Yeah.

Dan: Does this cover Boulder County? Do you know?

Sterling: It does, yep. Does Metro DPA cover Boulder County, is that what you're saying?

Dan: Yes.

Sterling: Yes.

Dan: Okay. Perfect.

Ian: What doesn't it cover?

Sterling: The mountains, basically.

Ian: Got it. So, west of Jefferson?

Sterling: Yeah, pretty much. I can provide you with a list of all of the counties that are considered in the metro DPA area. So, it's basically Denver and the surrounding areas.

Dan: For all the listeners out there, we're talking Longmont, all the way down to pretty much Parker in Southern Denver. Will this cover Colorado Springs? Probably not that far down there. Right?

Sterling: I don't think so. I will have to double check on that.

Dan: I'm sure they have their own similar type of program.

Ian: Yeah, I'm thinking that it might be the same counties that we get our statistics from, which is about those 11 counties. Like you said, Dan, from Boulder County all the way down to Douglas County, which includes Castle Rock most likely. Having the Metro DPA and having the statistics labeled as Denver Metro Statistics on Real Estate Market, I'm assuming that it's the same area. But we would greatly appreciate that information, though, of where it's actually covered.

Sterling: Yeah, 100%. All right. Some of the benefits of the Metro DPA. Higher income is allowed, which is nice. You do not have to be a first-time homebuyer. There's also a lower mortgage insurance fee, and it does not consider household income.

Dan: What does that mean exactly, Sterling?

Sterling: So, it will not take into account everyone that is living into the home and adding all their income up, and saying, "Oh, well, now they make $100. These two borrowers make $90,000 each. They're going to be living in the home. Now that's $180,000." So, that's taking the household income into account. Where if it's just borrower A is qualifying for the loan, and even though person B is going to be living with them, they're not looking at person B's information.

Dan: So, this could be beneficial for investors. Because that would allow Person B to still be available for a conventional or different type of loan, correct? Because they wouldn't be connected with this type of program.

Sterling: Correct.

Dan: Obviously, there's lots of parts that go into that. But they're not technically tied into this program like the previous CHFA grants, where both parties need to be involved in there. They're tied into that loan program.

Sterling: Right. All right. Now we get into the fun stuff, the Boulder County DPA.

Ian: Let's go.

Sterling: All right. This one, in particular, focuses on first-time homebuyers in Boulder County, outside the city limits of Boulder. Very key factor. Not inside of the city limits of Boulder but the surrounding area. So, your Longmont area and things of the likes. What this program will do will give up to 10% in assistance, a maximum of $40,000.

Ian: Damn.

Dan: Yep, Sterling. Thanks for recommending this to me. Come on, bro.

Sterling: Well, I don't think that you would fall into this category.

Dan: No, I don't fit this one, unfortunately.

Sterling: This is how the loan term works. Households with 61% to 80% of the area median income, it's a 3% interest loan amortized over 10 years. So, you're paying this loan off in 10 years, the assistance Loan off in 10 years.

Ian: Sorry. We're still talking about Boulder, right?

Sterling: Yep.

Ian: So, that 40,000 maximum would have a 3% interest loan over 10 years.

Sterling: Correct.

Ian: Got it.

Sterling: If you're 61% to 80% of the AMI. If you're 60% or below the area median income, it's a deferred loan with no monthly payments, and 0% accrued interest.

Dan: That's great. Because I think the median income here is like 150 plus, maybe 180.

Sterling: Yeah, so if you're at 60% of that, then, hey, you get a deferred loan, deferred assistance loan. Some of the requirements now. There's going to be a little bit more requirements on this one. There are income limits. There are asset limits. So, they'll look at what your assets are — money in the bank, your 401Ks, things like that. Must be a first-time homebuyer for this. Again, goes with the same rules that CHFA does. There's a purchase price and appraised value limit of 489,000. So, you can't go above the 489,000.

They have not taken into account the new conforming loan limit. So, this information will most likely change. But as of today, December 6, that's where it's sitting. You also have to take a homeownership training course. You need to make a minimum of $2,000 or 1% of the purchase price, whichever is greater. Also, must be owner-occupied. You must pass a third-party inspection. After the appraisal comes in, a third party will come in and inspect the property, and make sure that it passes their set of rules. There's also a FICO minimum following the Fannie, Freddie guidelines.

Ian: One thing I want to address here is that, for those of you who are not watching this on YouTube and are just listening to it, well, number one, go on to YouTube because there's a lot of fresh faces here, and we look stunning here. But number two is that there's a lot of information being passed on to you guys.

If you're not taking notes, you're not going to absorb all this information. For you, first-time homebuyers out there, there is so much good information out here with greater Metro Denver area, Boulder County. Like the CHFA, there's so much that you can do with this stuff that if you're not taking notes, or if you just don't know what's at your inventory for you to complete these transactions with as little money down as possible, you're not taking full advantage as an investor. You're losing that responsibility, right? You should be responsible for yourself by learning this information.

With that being said, going back to the purchase price over appraised value limit, Sterling, what exactly is that? I'm not exactly getting that.

Sterling: Okay. Say, the purchase price or the contract price cannot exceed $489,000. Or if the appraised value, say, you go into that home and it's at 480 but the appraisal comes back at 500, you're now above the appraised value limit of that 489.

Ian: I see. So, one of them has to surpass 489,000.

Sterling: They have to be below.

Ian: Both of those two?

Sterling: Correct.

Dan: That's so interesting to me.

Ian: What happens at that point? If you're at to the appraisal point of the contract, and you're almost getting ready to close but, boom, it appraises higher? Then what's happening for our buyers?

Sterling: Then you can't use this program.

Ian: Damn.

Sterling: I know.

Dan: So, we have to go find that appraiser to say, "Hey, mister of miss appraiser, what are you doing? We need this exact value."

Sterling: Yeah, exactly. Maybe go bring a hammer, and put some holes in the wall or something. I don't know.

Ian: Yeah, that's significant. Especially looking at median home prices within the greater Metro Denver area in general, it is already above this. We're looking at 560 in greater Metro. But I'm assuming Boulder County, it's a little bit higher. Looking at appraised value limit of 489, I mean, that already limits your search. Right, Dan?

Dan: Oh, 100%. You're looking at 550 up here, too, for the average four-bed, two-bath that's in decent condition. Maybe 500 right now. I guess, maybe, Sterling, I don't know if you plan on touching on these new conforming loan limits. Because, obviously, this should be changing along with those limits?

Sterling: Yes, it should follow suit. When that will happen? I'm not sure. I will say last year, December 15 was when CHFA came out with their new conforming limits. If anything holds true, hopefully, by next week, we're going to be getting all updated information here. So, take this with a grain of salt on the purchase price appraised value limit or the loan limits as those will most likely change in all of these programs.

Dan: For sure.

Ian: Because this was a really good program for those Boulder County residences until that point.

Sterling: Oh, yeah.

Dan: It's almost like a slap in the face for the bias that we have up here. It's like, "Oh, well, you can, but you can't. Because we just got to find a nice, little trailer outside of town for you."

Sterling: Yeah, go that tent underneath that freeway overpass.

Dan: No, honestly, though, there are some decent prices up here at under 500 right now, just with the way the market shifted. But it's pushing it at 49 limit. Interesting.

Sterling: Yeah, and speaking with last year and the previous year, there's been such a steep increase that it's hard. We're playing ketchup right now.

Ian: Yeah, wait till we play mustard.

Sterling: Got you.

Ian: We'll be making a sandwich.

Dan: I had to.

Sterling: I'm a hot sauce guy. So, we'll see what's up. All right. So, there's also a DTI requirement, AUS approval just like all the other loan programs out there. Some benefits of the Boulder County DPA. It helps with down payment and closing cost assistance, where that 10% can be really used to almost no out of pocket. Essentially, a lot of those closing costs. You think 10 grand with closing costs, plus your down payment. It's a lot of money. So, this gears to help more towards down payment and closing costs.

This focuses strictly on Boulder County and, again, helps residents afford safe and accessible housing in Boulder County. Not as many benefits as the other ones. But hey, it's still out there. If you fit the bill and can roll with it, then let's see what we can make happen.

Ian: 40 grand is so significant. I mean, that is so much at 0% interest. Holy crap.

Sterling: Yep. Now we'll get into the H2O Down Payment Assistance Program. What the H2O means is house to homeownership. This is down payment—

Ian: I thought they were drowning in loans.

Dan: They're drowning in assistance. It can't wait to give it away.

Sterling: So, this is down payment assistance within the Boulder City Limits, within Boulder City. You can get up to $100,000 in assistance.

Dan: Damn.

Ian: Damn,

Sterling: So, this is geared towards first-time homebuyers. Funds are, unfortunately, limited. This does act as a shared appreciation loan. So, what that means is there are no payments are made on the loan for up to 15 years. So, that $100,000 or whatever assistance you're getting, no payments are made on the loan for up to 15 years unless the home is sold or the title is transferred. When the loan comes due, the full amount is due back along with the share of the appreciation.

Ian: What is that share? Because that could be pretty significant.

Sterling: Yeah, that's a really good question. They had some calculation on there and stuff.

Ian: 100% of the shared appreciation.

Dan: Shared with who? The banks? The lender?

Sterling: Yeah, shared with the program. So, they would get that money back into their assistance bucket, because the funds are limited.

Ian: Yeah, especially when they're assisting up to $100,000, that is crazy.

Dan: It's in Boulder County, the city of Boulder with the highest appreciation, probably one of the most out of all of the United States.

Ian: Yep.

Dan: Good for them.

Sterling: One of a kind up there.

Dan: We live in a bubble.

Ian: There's something like that. I think was on the Inves2FI Podcast with Craig and Ziona. A Big shout out.

Sterling: Shout out.

Ian: There's some gentleman on there that was saying that, yeah, we can give you a loan for a certain amount based on the LTV or whatever equity you have in the place. But we won't ask for anything or any sort of payments until you sell the property. I think it was like 16% of whatever that appreciation is. I was talking about that option with Kath, my wife. We were thinking about the appreciation that we've gotten so far with our San Diego place.

Looking at the equity, that whole shared appreciation here, which is almost like the program that I'm seeing right now with getting a loan. You don't have to pay anything until you sell the property, right. Then if they're getting up to 15% or 16% on the appreciation of it, that's hundreds of thousands of dollars. They're getting what? 20, 30 grand, just for giving you a loan of, let's say, 10 grand or whatever that price may be. Yeah, I guess, the number of that percentage of what the appreciation might be is the biggest factor here, and whether it's a really good deal or not.

Sterling: Yeah, so, to answer that question, it is the original loan amount plus 15% in appreciation. Say, you purchase a home for $600,000. They gave you 15% of that purchase price, which was $90,000. Say, the home value is $800,000 when the loan is due, and that there's $200,000 of appreciation in there. So, the original loan plus the 15% appreciation would be due back $120,000. So, the 90% of the loan amount plus the $30,000 in that appreciation.

Ian: Okay. It's as of the loan date. It's not like it's following that appreciation for years on end, right?

Sterling: Correct. So, 15 years from that note date.

Ian: Got it. Okay.

Sterling: Some of the H2O requirements. Water is always better.

Ian: Yeah, two hydrogen, one oxygen.

Sterling: So, you must work in the city of Boulder and have a minimum work history of one year within the most recent 12 months. You must purchase a market rate home. You must be income and asset qualified. So, they'll look at your income as well as your assets. You must be a first-time homebuyer, and take that homebuyer education course.

Another caveat is one of the borrowers must work a minimum of 30 hours a week, minimum of a $2,000 contribution. So, out of pocket expenses. GTI not to exceed 42% — a bit of a decrease from the Metro DPA. This one also must be owner-occupied. Another weird caveat to this one is the number of bedrooms may only exceed number in household by one. So, if you are a single person applying for a single loan, then you can only purchase a home that's a two-bedroom home. If you have a co-borrower, then you can get a three-bedroom home.

Ian: This only applies to the borrower. You can't have a renter come in and be like, "Oh, I got four people with signed leases. I could buy a five-bedroom place."

Sterling: Right. Exactly. It cannot be that.

Ian: Then I think you mentioned this already, Sterling. But just to be perfectly clear, let's say, if I were to have two people on this H2O program, then we can have a three-bedroom place applied for this. But all three people need to work 30 hours a week. All three people need to have a $2,000 minimum contribution. All three people need to have a 42% or lower DTI. Is that right?

Sterling: So, when you have a co-borrower, it's taking both of the borrower and co-borrower's income and liabilities into a whole. So, it would be the whole amount cannot exceed 42%. Borrower and co-borrower, their DTI (debt to income) cannot exceed 42%. Minimum contribution that is hold. So, you would have two — co-borrower and borrower are responsible for $2,000 total. Only one person must work 30 hours a week. So, if you had a part time working 20 hours a week, and he had a full time working 40 hours a week, then you'd be okay. If you had two part-time workers working 20 hours a week, you would not qualify for this program.

Ian: Got it. The amalgamation of everyone.

Sterling: Yep, so, here's some of the H2O benefits. It helps residents purchase within the city of Boulder, and it's some of the highest assistance available.

Ian: Because you mentioned the very first bullet point. They need to have lived there and had a job within — does it need to be within the city limits of Boulder in order for them to have a minimum work history of one year within the most? Okay. So, I guess the location of the occupation doesn't need to be within the city of Boulder, but they need to have — wait. Oh, yeah, it is.

Sterling: It does.

Ian: Most work in the city of Boulder, yeah. I see, yep.

Sterling: Correct.

Ian: I missed that very first point. Got it.

Sterling: Yep, benefits, like I said. Again, that concludes my presentation. Again, I just wanted to thank you guys for having me on, and let me blabble again and talk about down payment assistance. I think this is some really good information. I think this can really help borrowers enter the market, especially if they are strapped with liquid funds. Maybe you're not strapped with liquid funds, but you would like to enter the market strategically and be strategic about your funds. Then hey, let's definitely see where you fit and how the assistance can help you, mr. and mrs. borrower.

Dan: A couple of things that I wanted to point out there, too, is just, one, you don't technically have to be a first-time homebuyer. Just within the last three years. Two, you also don't need to be a super low-income earner to get these types of programs, especially in Boulder where medium houses in price is about a million dollars. So, $100,000, that's your down payment, 10% down.

These are types of programs that allow different types of investors to get in, especially if you're house hacking. Don't count it out, regardless of what you make or where you're at or what you're doing. It's one simple conversation with a lender before you can find out. Like, hey, maybe I just need to do a couple of things here to get this lined up for next year or next couple of months.

Sterling: Or maybe I'm already qualified for this, and I didn't know it.

Dan: Exactly.

Sterling: Now, I can enter today, and write that appreciation wave and pay in three years if that becomes due, or we see another spike in home prices. Then, hey, you can refinance your home. Take that lower rate, pay off your assistance. Now that's all gone, and you have a lower rate and a lower payment.

Ian: For the people that were just listening, how can people reach out to you, Sterling, just in case they can't see that QR code?

Sterling: Yeah, definitely. So, you can reach me at my phone number 951-445-9008, or you can reach me via email. It is my first initial S and my last name Coldani — scoldani@boemortgage.com.

Ian: You were saying earlier?

Sterling: I was saying earlier just a testimony of this CHFA. I helped this client. Within a year, actually about a year and a half, with the current spike and everything that happened, I was able to pay off that with a refinance. I was able to lower his monthly payment, pay off that assistance, and save them about $400 a month in mortgage payments, and paying off that assistance. Plus, he kept all the equity in his home.

Ian: Real good.

Dan: Key word here is, let the lenders hold the keys.

Ian: That's right.

Dan: Talk to a good agent if you want to get a good deal. But it's only so much we can do on that side of things.

Ian: Yeah, for real.

Sterling: Yeah, talk to us, too, as well. Because we can. We're the experts, so we can put you through these programs and say, "Okay. Well, this program isn't going to work just based off of these two things. But let's try this program." The worst that's going to be said is, "No, you don't qualify for the assistance. Because A, you either make too much money, which isn't necessarily a bad thing. Then you can still get in at that 3% down." There's plenty of options to be had.

Ian: I've had a couple of buyers close in September and October with that down payment assistance program, through CHFA, 0% down. One of them had a check go to him for $950. So, he basically only went to the closing table, only putting down approximately $4,000-ish and purchased a house hack that is almost cash flowing for him.

So, it's combining these two powers of finding the right property, renting out the rooms or doing Airbnb or whatever that is for generating income, and finding a way to lower your debt or bringing as little money as possible towards the closing table or the closing of the transaction, it's a win-win. I mean, if you can combine all these things, it's a perfect storm in a good way.

Sterling: Yeah, in a perfect world, with CHFA, you could buy a house for $1,000 out of pocket.

Dan: It's crazy. Absolutely crazy to me. We're not talking about just a house. We're talking like half a million-dollar house, too, which to most people just sounds like, what?

Sterling: If the conforming loan limits go up, you're buying now closer to an $800,000 home for technically $1,000 if everything, all the cards are played correctly. It's crazy. But it's really good for the borrowers. Let's get you into the home. Let's have that American dream. Let's build that generational wealth, and let's use the products that are available to you to do that.

Ian: Hundo P. Love it. Again, thank you so much, Sterling. Most def. Hundo P, baby.

Sterling: No cap.

Ian: No cap, baby. Thank you so much, Sterling. It's always a good time having you on. Good vibes and good information, man. With that being said, one more time for the audience in the back, what is the best way to get in contact with you?

Sterling: You can hit me up via cell phone. Line's always open. Number is 951-445-9008. My email, again, scoldani@boemortgage.com.

Ian: How about you, Dan? How can people reach out to you?

Dan: Yeah, you, Boulder County folks, hit me up. You could give me an email at dan@thefiteam, or my number at 720-649-4944, or Instagram @dan.guentherrei. Or just hit me up and say, I want to buy up in Boulder County, but I don't want to work with you.

Ian: I do not want to drive. So, I will gladly give it over to you, Dan.

Dan: I appreciate that.

Ian: So, with that being said, I am ian.realestateagent over in Instagram, TikTok, and YouTube. I post up memes. It's all for the edutainment, as well as educational material, not just the meme. So, come for the memes. Stay for the education. I post weekly stuff on YouTube as far as vlog tours, what it's like to have a house hack, and all that good stuff.

Dan also has a YouTube channel, but I'm sort of holding it to him right now and sort of manifesting it in making sure that he's doing it himself. Because he's doing all these cold calls. He does a really good job, as far as attraction of potential leads. If you want to get into the team and learn this stuff, hit up Dan as well. He's selling himself short in that aspect.

With that being said, this is the Invest in Denver Podcast hosted by myself, Ian Jimeno, a production from The FI Team. I will see you all later. Thank you.