Most people need to borrow money to purchase a home, but they still need a significant amount of cash available to use for a down payment.
If you’re thinking about buying a home, understanding how much you need to put down upfront is an important step in determining whether you’re ready or not, and what price range you should be looking in.
The size of down payments in Colorado has increased over the past few years as home prices have risen. Right now a lot of potential homebuyers are asking, “what’s the average down payment on a house in Denver?”
Down Payments in Metro Denver
According to a real estate market report from October 2017, the average home sale price in metro Denver was $372,800. The average sale price is projected to rise to $383,667 by October 2018.
Traditionally, the size of a home down payment was assumed to be 20% of the home’s value. That translates to $74,560 on a $372,800 house, and $76,733 on a $383,667 house.
That’s a great example of “the cost of waiting.” If you can buy a house now, do it. Waiting will only force you to pay more for the same amount of house (higher sale price and higher down payment).
The good news is that, today, you don’t necessarily have to make a 20% down payment. There are a variety of ways to lessen the burden of upfront costs of purchasing a house.
Lowering Your Down Payment
As the most recent Down Payment Report shows, while many homebuyers do still end up plunking down 20%, there are other options that appeal to people that don’t have sufficient savings to provide $75,000 upfront.
In fact, a majority of buyers have found alternatives to the conventional 20% payment. In September 2017, 60 percent of first-time buyers made a down payment of six percent or less.
On a $383,667 home (the projected avg. price in metro Denver by fall 2018), six percent translates to $23,020, a much more reasonable sum.
Some of the alternative options that will help you pay less than six percent upfront include:
You’re probably familiar with the government-insured loan programs offered through the FHA and VA. I’m surprised how few people know about the opportunity provided by HomePath.
HomePath loans require lower down payments:
- A 5% down payment is the norm for homebuyers
- A 3% down payment is achievable for people using down-payment assistance
- A 10% down payment may be required if you’re using HomePath to purchase a second home or investment property
It’s a great program for metro Denver area homebuyers who don’t have the savings to make a conventional 20% down payment but understand that waiting will only mean they have to pay more later.
Let’s Talk About Down Payments
Whether you want to learn more about HomePath or get to know other options for minimizing your down payment on a Colorado home, I’m your resource for honest, personalized advice. I can help you find the right home and the right financing options for your real estate goals.
For expert guidance on your home search and home financing options, call Carla Knight at 720-626-9747 or send an email to firstname.lastname@example.org.