Getting started with the home-buying process in Colorado Springs can feel like everyone’s speaking some secret real estate language, and you’re standing on the side looking like an idiot.
You might hear about “DTI ratios” while touring a home in Rockrimmon. The lender sends emails about “PMI” and “LTV” that require a dictionary and possibly a translator. Meanwhile, you’re nodding along, taking notes, and Googling between appointments.
Most first-time home buyers can feel a little lost at some point. Having a real estate agent who explains terms and translates acronyms can make all the difference between a stressful experience filled with late nights on your laptop and a comfortable process where you actually kind of have fun.
Whether you’re a military family PCSing to Fort Carson, a young professional eyeing Old Colorado City, or anyone trying to make sense of our market at 6,035 feet elevation, our team at Sailing Stone assembled this guide to translate real estate speak into English. We’ll cover the vocabulary you’ll encounter while house hunting from Briargate to Fountain, with Colorado Springs real estate terms you should be familiar with.
Plus, we’ll tackle Colorado quirks like TABOR and water rights, and give military families the VA loan and BAH breakdown you may not even know you need.
Special thanks to Sterling Campbell, Loan Consultant with loanDepot, for assisting with any loan-related terms in this article.
If you’re looking for an experienced loan expert in Colorado Springs, get in touch with Sterling today!
Your down payment is the upfront cash you bring to closing: your initial ownership stake in the property. In Colorado Springs, where home prices range wildly depending on whether you’re looking at a Manitou Springs fixer-upper or a Flying Horse estate, the traditional 20% down payment can mean very different numbers.
But here’s the thing: Many first-time buyers aren’t putting down 20%. Through CHFA (Colorado Housing and Finance Authority) programs, qualified buyers can put down as little as 3%. For military families using VA loans, zero down can happen (though you’ll pay a funding fee we’ll explain later).
The amount you put down directly impacts your loan-to-value ratio (LTV), which is basically the percentage of the home’s value you’re borrowing. Higher LTV means the lender’s taking more risk, which usually means they’ll charge you for that privilege.
Private Mortgage Insurance (PMI) kicks in when your down payment is less than 20% on a conventional loan. Think of it as paying for the lender’s peace of mind about your smaller down payment.
On a home with a $500,000 sale price and 5% down, PMI typically runs $200-$400 monthly, depending on your credit score and lender. Yes, that’s money that could go toward your principal, but it’s also what makes homeownership possible without waiting years to save 20%.
Your interest rate is the cost of borrowing money. Simple enough. But the Annual Percentage Rate (APR) tells the whole story. APR includes your interest rate plus other fees rolled into one number.
For example: A lender offers you 7.0% interest. Sounds straightforward. But with origination fees, points, and other costs, your APR might be 7.25%. That makes a significant difference on your monthly mortgage payments.
Pro tip: This is a huge investment, so it’s a good idea to get a second opinion when it comes to your mortgage. A direct lender could offer mortgage options and make exceptions that brokers can’t. The interest rate is important, but so are the total fees that you’re charged. Get an estimate in writing to compare costs between different mortgage options.
A fixed-rate mortgage keeps the same interest rate for the entire loan. Your payment in year one equals your payment in year 30 (though taxes and insurance will creep up, as they always do). Most buyers choose this for the predictability.
An adjustable-rate mortgage (ARM) starts with a lower rate that changes after an initial period. A “5/1 ARM” means five years of fixed rates, then annual adjustments based on market conditions.
For military families: If you’re only planning to own for one PCS cycle (typically 3-4 years), ARMs can make sense. Why pay extra for 30 years of rate protection you won’t use?
Conventional loans are your standard, non-government-insured loans. You’ll need at least 3% down and decent credit (620+ on your credit report). These are common throughout Colorado Springs and offer good flexibility.
FHA loans are backed by the Federal Housing Administration. With just 3.5% down and a 525 credit score, they’re accessible for many first-time buyers. The catch is that you’ll pay a mortgage insurance premium (MIP) for the life of the loan unless you put down 10%.
VA loans are essentially a thank-you from the military for your service. Zero down payment required. No PMI. Competitive rates, and some lenders will work with a 525 FICO credit score. You’ll need a Certificate of Eligibility (COE), and you’ll pay a funding fee, which is currently 2.15% for first-time users with no down payment (as verified on VA.gov).
Pre-qualification is like a first date: quick, basic, and not very committed. You tell the lender some numbers, and they give you a ballpark estimate on a mortgage loan.
Pre-approval is the real deal. The lender verifies everything, including your income, assets, and credit, and commits to a specific loan amount. In Colorado Springs, listing agents and sellers always expect to see a pre-approval letter with your offer. No pre-approval usually means no consideration.
Pro tip: Local lender pre-approval often beats online lenders in competitive situations, because agents know exactly who to call or where to go if they need to get a hold of someone. They don’t feel as good about RandomOnlineLender.com. You should also make sure to look at your loan officer’s experience and reputation.
Earnest money shows sellers you’re serious. It’s typically 1% of the purchase price, held in escrow until closing. This becomes part of your down payment or closing costs. It needs to be in the bank.
Escrow, not scarecrow, is like the neutral referee in your real estate deal. It’s a third party, usually the title company, that holds your earnest money and important documents until everyone’s done their part.
Think of it as a safe box that neither you nor the seller controls. Only when the lender funds the loan, the seller signs over the deed, and you’ve signed your life away on a stack of papers, does escrow release the money and the keys.
Without escrow, it would basically be like you handing a stranger a suitcase full of cash and hoping they give you the house. This way, nobody gets burned.
Closing costs are all the fees required to finalize your purchase, typically 2-5% of the loan amount. On a $500,000 home, budget $9,000-$14,000 for closing costs, knowing that there are a lot of variables at play.
What’s included in there:
Sometimes sellers will help with closing costs in negotiations, though this is less common when inventory is tight. A good agent will help you factor these costs into the equation of buying a home. Nobody likes surprises at the last minute.
The Taxpayer’s Bill of Rights (TABOR) is Colorado’s constitutional limit on tax increases. Without getting too political, it means your property taxes can’t skyrocket just because your home value does, because voters have to approve major increases.
Translation: Colorado Springs generally has more predictable property taxes than many comparable cities, though recent legislation has made some adjustments to these limits.
Here’s something they don’t deal with much back East: In Colorado, owning land doesn’t automatically mean owning the water under it. If you’re looking at properties with wells (common in Black Forest or eastern El Paso County), pay attention to water rights.
Adjudicated water rights mean documented, legal water access. Properties with these are worth more because they protect you from water availability issues. If you don’t have water rights, you’re relying on groundwater availability, which can be risky in drought years. We also always recommend talking with a water rights attorney if your property has something other than a common well or standard water setup.
Homeowners Associations (HOAs) run many Colorado Springs neighborhoods, especially newer ones. Beyond the monthly fees (anywhere from $50 to $500+), Colorado HOAs have serious authority. They can place liens for unpaid dues, even if you’re current on your mortgage. Always read those CC&Rs (Covenants, Conditions & Restrictions) before making an offer. If you can’t access them ahead of time, there is a review period where you can terminate the contract and get your earnest money back if you don’t like the HOA rules.
Metro districts are special taxing entities in newer developments like Banning Lewis Ranch or Cordera. They fund infrastructure through additional property taxes. That shiny new home might come with an extra $100-$400 monthly in metro district taxes. But don’t worry, sellers must disclose this.
The VA funding fee is basically the cost of that zero down payment benefit. First-time users pay 2.15% with no down payment (current as of 2024, per VA.gov). On a $400,000 home, that’s $8,600, typically rolled into your loan.
The big benefit that many don’t know is that veterans with service-connected disabilities are exempt from the funding fee. If you have a VA disability of 10% or more or if you are on active duty and have a Purple Heart, you don’t pay the funding fee. You can also now have two VA loans at the same time. That’s serious savings.
Your Certificate of Eligibility (COE) proves you can use VA benefits. Get this early, because while it’s often quick, complications can cause delays when you’re trying to make an offer.
All properties are technically sold “as-is,” which means sellers aren’t obligated to make repairs or give credits for issues. In competitive markets, even pristine homes will be sold as-is because sellers can do it. It doesn’t mean the house is falling apart, it just means you should inspect carefully and offer accordingly. You can always ask for fixes or credits!
Contingencies are like safety nets that can protect you from losing thousands of dollars of earnest money (and your freaking mind) if something goes sideways:
Fewer contingencies make stronger offers, but don’t waive inspection in Colorado. Between radon, expansive soils, and our lovely hail, you’ll need that protection.
Your due diligence period is when you investigate everything about the property. In Colorado Springs, this means:
Take this seriously. It’s your chance to uncover any deal-breakers before you’re committed.
There you have it: some key homebuying terms, explained for normal people. And while understanding terms is great, here’s how to best use this information:
Get properly pre-approved. Choose a lender who knows Colorado Springs. Local lenders often have advantages in competitive offers, and sellers trust them to close.
Get your finances straight. Know your credit score, get a lender to calculate your debt-to-income ratio, and figure out your comfortable down payment. If you’re close to 20% down, consider whether waiting to avoid PMI makes sense for your situation.
Choose your team wisely. Interview at least three agents. Ask about their experience with your target neighborhoods and situation. You want someone who explains things clearly without talking down to you. Our team at Sailing Stone prides ourselves at walking with buyers throughout the process, without the BS.
Do your homework. Take advantage of free resources like CHFA’s homebuyer education classes. Military families, use your installation’s housing office; they’re surprisingly helpful, and it’s free.
The Colorado Springs market moves at its own pace, sometimes fast, sometimes steady. But armed with this knowledge, you’re ready to have real conversations with real estate professionals and make informed decisions.
The difference between people who keep renting and those who get their keys is taking action with the knowledge you have instead of waiting until you understand everything perfectly (spoiler: nobody ever does).
Ready to stop Googling real estate terms at 11 PM and start actually looking at houses? Get in touch with our team and let’s talk.
Your Colorado Springs home, complete with mountain views, 300 days of sunshine, and yes, the occasional hell-raising hail storm, is waiting.
Colorado Housing and Finance Authority: First-time buyer programs, down payment assistance. Their offerings change regularly, so check current programs.\n\nPikes Peak Association of Realtors: Local market data and trends. Their monthly reports show what’s actually happening in our market.
Department of Veterans Affairs: Everything VA loan related. Current funding fees, eligibility requirements, COE applications.
Colorado Division of Real Estate: Consumer resources and official forms. Not thrilling reading, but important.
Military OneSource: PCS resources and financial counseling. Free and genuinely helpful.
Sailing Stone Real Estate is your home resource whether you’re a fresh-faced newbie to the home-buying scene, a seasoned pro with plenty of houses under your belt, or simply looking to offload that fixer-upper. We know buying or selling a home is a huge deal, which is why we’re here to help you through it no matter what comes our way.
Sailing Stone Agents will keep your buying or selling plans on course. Our seasoned pros have the expertise to steer you clear of financial disasters and guide you toward your real estate goals. Our TOP Priorities are Your Goals, Your Dreams, and Your Peace of Mind.
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