Colorado Affordable Home Ownership Program Bill Update

Detected March 4th, 2026

Summary

Colorado bill SB26-040 proposes changes to the state's affordable home ownership program. Key amendments include clarifying income eligibility requirements for housing units and allowing modifications to monthly housing cost percentages under certain conditions. The bill also addresses local affordability mechanisms and potential rental of program units.

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What changed

Colorado bill SB26-040, concerning the affordable home ownership program, seeks to clarify eligibility and cost requirements for housing developed by eligible organizations. Specifically, it clarifies that the income limit of 120% of the area median income applies to housing constructed by eligible organizations. The bill also introduces a waiver process for modifying the 35% monthly housing cost limit, allowing for exceptions if a substantial need exists and the unit has been inadequately marketed. Furthermore, it permits the division of housing to accept local affordability mechanisms in lieu of state-prescribed use covenants under specific conditions and allows for the potential rental of program-funded units, with guidance to be issued by December 31, 2026.

This legislation will impact nonprofit organizations, local governments, tribal governments, community development financial institutions, and community land trusts administering the program. Compliance officers should review the proposed changes to income eligibility, housing cost calculations, and the acceptance of local affordability mechanisms. The requirement for the division to issue guidance on renting units by December 31, 2026, indicates a need for entities to prepare for potential rental options within their projects.

What to do next

Review proposed changes to income eligibility and housing cost limits for the affordable home ownership program.
Prepare for potential rental of program-funded units, awaiting guidance due by December 31, 2026.
Assess the applicability of local affordability mechanisms as potential alternatives to state-prescribed use covenants.

Source document (simplified)

SB26-040

Affordable Home Ownership Program

| Type | Bill |
| --- | --- |
| Session | 2026 Regular Session |
| Subjects | Housing |
Concerning the affordable home ownership program.

Recent Bill (PDF) Recent Fiscal Note (PDF) Bill Summary:

The division of housing in the department of local affairs (division) administers an affordable home ownership program (program) that makes grants to nonprofit organizations, local governments, tribal governments, community development financial institutions, and community land trusts (eligible organizations) to support affordable home ownership, including the development of residential housing units that are described in an eligible organization's funding request (project). Current law specifies that only a household with an income less than or equal to 120% of the area median income is eligible for assistance through the program, but it is unclear whether this requirement applies to housing units constructed by an eligible organization through one of its projects. The bill clarifies that only a household with an income less than or equal to 120% of the statewide area median income is eligible for housing constructed by an eligible organization through one of its projects.

In addition, the program requires that housing offered through the program, including all taxes and fees, costs not more than 35% of a household's monthly income. The bill allows the division to modify this percentage as applied to a residential unit constructed by an eligible organization as part of an affordable housing project pursuant to a waiver process initiated by an eligible organization if a substantial need for housing the project's target population exists, the unit has been adequately marketed to eligible buyers for purchase for at least 6 months after the issuance of a certificate of occupancy, and the unit has not been purchased by an eligible buyer within that 6-month period. In lieu of this process, the division may approve an eligible organization's process for determining when to exceed the maximum monthly household income for a unit funded by the program.

The division may issue a waiver with a different housing cost limit from the limit requested by the eligible organization if a different limit would better serve needs identified in a housing assessment and the project remains financially feasible in the division's discretion.

For an eligible organization, the bill specifies that the division is required to accept a local affordability mechanism in lieu of any state-prescribed use covenant if the division determines that the local affordability mechanism allows the state to maintain its obligations for compliance and compliance monitoring and is substantially equivalent to or more protective of long-term affordability and primary occupancy than a state-prescribed use covenant or the local affordability mechanism is necessary to access financing for disproportionately impacted communities.

The division may allow an eligible organization to rent residential units constructed as part of the project. On or before December 31, 2026, the division is required to issue guidance for when units within a project may be rented.

(Note: This summary applies to this bill as introduced.)

Prime Sponsors

Senator

Cleave Simpson
Senator

Judy Amabile
Representative

Katie Stewart

Committees

Senate

Local Government & Housing

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Status

Under Consideration

Introduced

Under Consideration

Upcoming Schedule

1 meeting

Wed

Mar 4

Senate General Orders - Second Reading of Bills

9:00 AM Senate Chamber

Related Documents & Information

| Date | Version | Documents |
| --- | --- | --- |
| 01/27/2026 | Introduced | PDF |

| Date | Version | Documents |
| --- | --- | --- |
| 02/27/2026 | PA1 | PDF |

| Date | Version | Documents |
| --- | --- | --- |
| 03/02/2026 | MEMO1 | PDF |
| 01/30/2026 | FN1 | PDF |

| Activity | Vote | Documents |
| --- | --- | --- |
| Adopt amendment L.002 | The motion passed on a vote of 6-1. | Vote summary |
| Adopt amendment L.003 | The motion passed without objection. | Vote summary |
| Adopt amendment L.004 | The motion passed without objection. | Vote summary |
| Adopt amendment L.005 | The motion passed without objection. | Vote summary |
| Adopt amendment L.006 | The motion passed without objection. | Vote summary |
| Refer Senate Bill 26-040, as amended, to the Committee of the Whole. | The motion passed on a vote of 6-1. | Vote summary |
Hearing Summary | Committee Report: PDF
| Date | Amendment Number | Committee/ Floor Hearing | Status | Documents |
| --- | --- | --- | --- | --- |
| 02/26/2026 | L.006 | SEN Local Government & Housing | Passed [] | PDF |
| 02/26/2026 | L.005 | SEN Local Government & Housing | Passed [] | PDF |
| 02/26/2026 | L.004 | SEN Local Government & Housing | Passed [] | PDF |
| 02/26/2026 | L.003 | SEN Local Government & Housing | Passed [] | PDF |
| 02/26/2026 | L.002 | SEN Local Government & Housing | Passed [*] | PDF |
* Amendments passed in committee are not incorporated into the measure unless adopted by the full House or Senate.

** The status of Second Reading amendments may be subsequently affected by the adoption of an amendment to the Committee of the Whole Report. Refer to the House or Senate Journal for additional information.

| Date | Location | Action |
| --- | --- | --- |
| 03/03/2026 | Senate | Senate Second Reading Laid Over to 03/04/2026 - No Amendments |
| 02/26/2026 | Senate | Senate Committee on Local Government & Housing Refer Amended to Senate Committee of the Whole |
| 01/27/2026 | Senate | Introduced In Senate - Assigned to Local Government & Housing |
Prime Sponsor

Sen. J. Amabile | Sen. C. Simpson

Rep. K. Stewart

Sponsor

(None) Co-Sponsor

(None)