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DENVER, CO – The House today passed legislation to update the Affordable Homeownership Program that was created by voter-approved Proposition 123. SB26-040, sponsored by Representatives Katie Stewart and Lesley Smith, passed by a vote of 44-20.
“Our bipartisan legislation will help more hardworking Coloradans qualify for down payments and other financial assistance to save Coloradans money on housing,” said Rep. Katie Stewart, D-Durango. “While Prop 123 housing projects have shown great success in delivering affordable housing across Colorado, the program isn’t working for every community. By creating more flexibility in this Prop 123 program, our bipartisan bill would make it easier to support hardworking people, especially in rural resort communities like mine.”
“Homeownership is a cornerstone of economic stability and wealth building for hardworking people, and our bill uses existing tools to make homebuying a more realistic goal for Coloradans,” said Rep. Lesley Smith, D-Boulder. “Increasing land and labor costs, paired with high interest rates, are making it difficult to build Prop 123 housing with the current eligibility requirements. We want to ensure that this program creates affordable housing options in our communities. This bill makes it less expensive for more hardworking Coloradans to purchase a home.”
SB26-040 would expand eligibility for qualified buyers and make practical updates to better serve every Colorado community and meet the reality of the 2026 housing market.
The bill would increase the allowable income threshold to qualify for the program to less than or equal to 120 percent of either the statewide Area Median Income (AMI) or the local AMI. This would allow more people to qualify for the program, particularly in rural communities.
Rising interest rates and insurance costs have also made it harder for Coloradans to meet the requirement that combined housing costs cannot exceed 35 percent of their income. This bill would create a process to allow some homeowners to spend more than 35 percent of their income on housing when a qualified buyer is not found after six months of advertising, further expanding the availability of the program for Colorado families.
Additionally, the bill would allow eligible organizations to temporarily rent units if they cannot be sold in a timely manner and create more flexibility in the program rules. These updates would provide the flexibility for the Affordable Home Ownership Program to adapt to the needs of communities across Colorado, and help ensure that the program is working as intended and serving as many Coloradans as possible.