The Credit Union of Colorado has revived a loan product that disappeared following the housing crash a decade ago — the zero-down conventional mortgage.

Reaction to its return will likely range from first-time homebuyers wondering what took so long to survivors of the foreclosure crisis asking why did they awaken a financial beast better left for dead.

“We are looking for a way for individuals to get into the market right away rather than having to save up a down payment while the prices are going up,” said Doug Schneider, vice president of marketing at the credit union, which got its start serving state employees.

Metro Denver home prices were rising 8.6 percent in April from a year earlier. And while that’s below the pace of prior years, only a few areas can beat Denver when it comes to home price appreciation the past five years.

Many first-time buyers, struggling with heavy student loan debt and escalating home prices, have found themselves always one-step behind when it comes to saving enough for a down payment. Now, they must contend with rising interest rates.

The credit union will underwrite mortgages for up to 97 percent on homes valued up to $467,100, with an added cost each month for private mortgage insurance.

The Credit Union of Colorado’s new twist is that it will cover the remaining 3 percent of a home’s cost via an interest-free loan repayable at a future sale or refinancing.

Interest-free, however, doesn’t mean no cost. Borrowers who qualify will pay 0.375 percent more on their 30-year mortgage rate than if they had made the down payment, said Andrew Kotaska, director of mortgage loan services at the credit union.

The going rate the credit union charges on a 30-year mortgage, 4.62 percent, would rise to 5 percent for someone borrowing

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