Do You Really Need 20% Down to Buy a House in Denver?

If you’re waiting to buy a house in Denver until you have 20% saved, your savings account and I need to have a little meeting.

You probably don’t need 20% down to buy a home.

Depending on the loan program and your qualifications, some buyers may purchase with 3%, 3.5%, or even 0% down.

So if you’ve been patiently trying to squirrel away $100,000 before even looking at houses, please stop punishing yourself.

How Much Down Payment Do You Actually Need in Denver?

There isn’t one magic number.

Your down payment depends on your loan program, finances and the property you’re purchasing.

Common possibilities include:

• Conventional: Certain programs allow as little as 3% down.

• FHA: Down payments can be as low as 3.5%.

• VA: Eligible borrowers may qualify with 0% down.

• USDA: Qualified buyers purchasing eligible properties may also qualify for 100% financing.

Whether you’re looking in Denver, Lakewood, Golden, Arvada, Parker or elsewhere around the metro, the better question isn’t:

“Do I have 20%?”

It’s:

“What financing strategy makes the most sense for me?”

Much less terrifying.

What Does 3% vs. 20% Down Actually Look Like?

Let’s use a $600,000 Denver-area home.

20% down = $120,000

5% down = $30,000

3% down = $18,000

That’s a $102,000 difference between putting 20% and 3% down.

Now, before anyone takes that extra $102,000 and orders a Range Rover, smaller down payments have trade-offs.

You may have a larger monthly payment and mortgage insurance. Your interest rate, closing costs and overall financial situation matter too.

But assuming you need $120,000 before you can even consider buying?

That could keep you renting and saving much longer than necessary.

Why Is Everyone Obsessed With 20% Down?

Because putting 20% down does have benefits.

With conventional financing, reaching 20% can eliminate private mortgage insurance, or PMI. A larger down payment also means borrowing less money.

Great.

But “20% has benefits” and “20% is required” are not the same thing.

And draining your entire savings account just to hit 20% isn’t necessarily a brilliant financial strategy either.

Houses have an uncanny ability to sense when you have no money left and immediately demand a water heater.

Does Colorado Have Down Payment Assistance?

Yes.

The Colorado Housing and Finance Authority, or CHFA, offers qualifying buyers using eligible CHFA mortgages assistance with down payment and closing costs.

Depending on the program and borrower qualifications, assistance may be available as a grant or second mortgage.

This is exactly why I don’t want buyers deciding they “can’t afford a house” based on a number they heard 15 years ago.

Find out what you actually qualify for first.

Should You Put 20% Down If You Have It?

Maybe.

A larger down payment could lower your monthly payment, reduce the amount you borrow and potentially eliminate PMI.

But keeping cash available for repairs, emergencies, moving expenses and life may also make sense.

There is no trophy at closing for putting the most money down.

The goal isn’t to walk into your new house cash-poor but victorious.

The goal is to structure the purchase intelligently.

The Bottom Line

No, you do not automatically need 20% down to buy a house in Denver.

You may be significantly closer to buying than you think.

Before you spend another year trying to reach an arbitrary savings number, figure out what your actual options look like.

Because the number that matters isn’t 20%.

It’s yours.

Want Me to Run the Numbers?

If you’re considering buying in the Denver metro but aren’t sure whether you have enough saved, reach out. Tell me your approximate price range and what you’re comfortable spending monthly, and we can start figuring out what buying could realistically look like.

Kayte Foster | Kayte Foster Homes
www.kaytefosterhomes.com