What is the Community Reinvestment Act?

If you're looking to buy a home in Denver, Colorado and save thousands on your mortgage, here's one homebuyer secret you can't afford to overlook: CRA lender credits.

Whether buying your first or fifth home, the Community Reinvestment Act (CRA) of 1977 could save you thousands, especially if you know how to use it to lower your interest rate.

What Is the Community Reinvestment Act (CRA)?

Passed in 1977, the CRA was created to encourage banks to meet the credit needs of low and moderate-income communities. In practice, this means banks may offer special incentives, like lower interest rates or closing cost assistance, when you buy in certain neighborhoods or meet specific income criteria.

The Midtown neighborhood in Denver (Zipcode 80221) is one of those target areas, which means buyers here may qualify for meaningful benefits through CRA-backed loans.

What are CRA Lender Credits? 

A CRA lender credit is money a lender gives you at closing. They are not loans and are not things you have to repay. This credit can be used for:

- Closing Costs

- Down Payment Assistance

- Buying Down your Interest Rate (more on this below)

Some lenders offer CRA credits worth up to 1.75% of your loan amount, offering an incredible savings of up to $11,000 on a $650,000 mortgage.

Why Lenders Offer CRA Credits

Lenders must comply with the CRA by making loans in underinvested communities. Your home purchase can help them meet those goals, so they're motivated to make the loan more affordable for you.

How You Can Use CRA Credits to Lower Your Interest Rate 

This is where it gets powerful: you can use CRA credits to pay for “discount points,” which permanently lower your mortgage rate.

For example:

• Without CRA credit: $380,000 loan at 6.8% = ~$2,480/month
• With CRA credit: Buy rate down to 6.3% = ~$2,355/month

That’s about $125/month in savings—and tens of thousands over the life of your loan!

Who Qualifies?

You may be eligible if:

• The home is located in a CRA-designated low- or moderate-income census tract
• Or your household income is below the area median

Midtown Denver has many qualifying tracts, which apply even to moderate-income households, not just low-income buyers.

What’s Next?

In Part 2, we’ll cover:

• How to find lenders offering CRA credits
• FHA vs. Conventional loan scenarios
• Why Denver buyers should act now
• Why the Midtown neighborhood is one of the best places in Denver to take advantage of free lender credits 

Stay tuned—it could save you thousands on your next home!