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How Much Should You Put Down On A House? Debunking the 20% Myth.

Buying a home is a monumental step. It's a declaration of independence, a milestone in your life journey, and a tangible realization of a dream. But if you're a first-time homebuyer, especially in a dynamic market like Colorado's, the process can feel daunting. One common hurdle that many face is the down payment. If you've been told that you need a hefty 20% down to secure your dream home, I've got some exciting news for you.


Question mark-shaped $100 bills in front of a blurred interior house wall.
One hundred dollar bills in the shape of a questions mark in front of a blurred interior house wall

The 20% Down Payment: More Than Just a Number


While many mortgage options allow for lower down payments, there's a reason the 20% mark has its advocates. Here are a couple of its benefits:


  • Lower Monthly Payments: A higher down payment usually translates to smaller monthly mortgage payments, giving you more financial flexibility.

  • Avoiding Mortgage Insurance: When you put down 20%, you often sidestep the extra cost of private mortgage insurance (PMI), which can add to your monthly expenditure.


Broadening Your Mortgage Horizons


Let's address the elephant in the room. The widespread belief is that 20% is the magic number for down payments. But the reality is, many mortgage options today allow homebuyers to put down significantly less and still secure their dream home.


  • FHA Loan: Ideal for single professionals, young couples, and families, the FHA loan requires only a 3.5% down payment. It's a favorite among first-time homebuyers in Colorado, with many of our clients reaping its benefits.

  • Conventional Loan: This option allows for a down payment as low as 3%. It’s a versatile choice, catering to various financial situations.

  • VA Loan: For our veterans and active-duty military personnel, the VA loan stands out, requiring no down payment at all.

  • USDA Loan: Another 0% down payment option, the USDA loan is designed for rural and suburban homebuyers.

  • Colorado Down Payment Assistance: Colorado is renowned for its commitment to making homeownership more accessible. The state offers a slew of down payment assistance programs to ease the financial journey of homebuyers. Programs like CHFA, metroDPA, and El Paso County Turnkey Plus, among others, are designed to help residents cover portions of their down payment and closing costs.


For those eager to turn the key to their first home, these options and assistance programs have become game-changers. My team has witnessed countless individuals and families achieve homeownership by leveraging these benefits.


Navigating Colorado’s Unique Housing Landscape


Colorado presents a unique market scenario. With mortgage interest rates at their highest in 21 years and a tight inventory, it’s easy to feel lost in the crowd. Sellers might be holding onto their homes due to attractive rates from yesteryears, but this doesn’t mean your homeownership aspirations are on hold.


In such times, understanding which mortgage option suits you best becomes even more vital. The silver lining? While a higher down payment might offer the benefits mentioned above, it's not the only path forward. And with the right guidance, even in this market, your dream home is well within reach.


Empower Your Home Buying Journey


Stepping into the housing market, especially for the first time, requires clarity and knowledge. More than just securing a loan, it’s about understanding your options, planning for your future, and achieving a dream. While the journey may seem overwhelming, remember this: With every challenge in the housing market, there’s a solution waiting to be uncovered.


Whether you’re a single professional, a couple starting a new chapter, or a young family planting roots in Colorado, the key is to stay informed, patient, and optimistic. Your dream of homeownership is valid, achievable, and closer than you think.


Ready to Start?


If you’re looking to delve deeper into the world of mortgages, down payment assistance, and making informed decisions, the first step is understanding your eligibility. And for that, you're not alone. Start your application now and let's turn that homeownership dream into a reality.



 

*No down payment loans: Closing costs and fees may still apply. First lien interest rates may be higher when using a DPA second. Opinions expressed are solely my own and do not express the views of my employer. Pre-approvals are given to clients who have met qualifying approval criteria, for specific loan requirements, and have been pre-approved by a PRMI underwriter. VA home loan purchases, have options for 0% down payment, No private mortgage Insurance requirements, competitive interest rates, with specific qualification requirements. VA Interest rate reduction loans (IRRRL) are only for Veterans who currently have a VA loan, current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA Cash-out Refinances are available for Veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and Lender overlays apply.




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*No down payment loans: Closing costs and fees may still apply. First lien interest rates may be higher when using a DPA second. Opinions expressed are solely my own and do not express the views of my employer. Pre-approvals are given to clients who have met qualifying approval criteria, for specific loan requirements, and have been pre-approved by a PRMI underwriter. VA home loan purchases, have options for 0% down payment, No private mortgage Insurance requirements, competitive interest rates, with specific qualification requirements. VA Interest rate reduction loans (IRRRL) are only for Veterans who currently have a VA loan, current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA Cash-out Refinances are available for Veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and Lender overlays apply.

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