First-Time Home Buyer Guide for Denver

How Much You Need Upfront

You probably need less than you think. The 20% down payment is a common goal, not a requirement. These are the usual minimums:

• Conventional loans. As little as 3% down for many first-time buyers. With less than 20% down, you'll pay private mortgage insurance until you build enough equity.
• FHA loans. 3.5% down with a credit score of 580 or higher. FHA is more flexible on credit but carries its own mortgage insurance.
• VA loans. No down payment for eligible veterans and service members.

On top of the down payment, plan for closing costs, often a few percent of the price, plus inspections and some savings left over after you move in. In today's market, sellers are often willing to cover part of your closing costs, so ask.

Down Payment Assistance in Colorado

Two programs help many Denver buyers cover their down payment and closing costs. Both work through participating lenders, so the first step is talking to a lender who offers them.

CHFA (Colorado Housing and Finance Authority)

• A grant of up to 3% of your first mortgage, capped at $25,000, that you don't repay.
• Or a second mortgage of up to 4% of your first mortgage, capped at $25,000, with no payments until you sell, refinance or move out.
• You don't have to be a first-time buyer. Income limits apply, you need a credit score of at least 620, and you'll take a homebuyer education class.
• You must use a CHFA first mortgage, and you'll contribute at least $1,000 of your own money.

metroDPA

• Assistance for down payment and closing costs, sized as a percentage of your first mortgage, for homes in participating Front Range cities and counties, including Denver.
• Household income up to $195,600 and a credit score above 640.
• It's a 30-year, interest-free second mortgage with no monthly payments, repaid when you sell, refinance or move out. It isn't forgiven.
• Buying in Denver County? Ask your lender about the city's Denver Advantage program too.

Assistance usually comes with a slightly higher interest rate on your first mortgage. A good lender will show you the numbers with and without it so you can compare.

Estimate Your Cash to Close

See roughly how much cash you'll need to buy. The starting values are an example for a first condo or townhome. Change any of them.

How Much Home Can You Afford?

You may have heard of the 3-3-3 rule, also called the 30/30/3 rule. It's a quick test with three parts:

• Keep your monthly housing payment under about 30% of your gross income.
• Have cash equal to about 30% of the price: 20% down plus 10% for closing costs and a cushion.
• Keep the price under about 3 times your household income.

In Denver, the second and third parts rule out most first-time buyers, and they don't need to. With low-down-payment loans and assistance programs, the first part is the one that matters most: can you comfortably afford the monthly payment and still save? Run your numbers in the monthly payment calculator, then get pre-approved for a real answer.

Buying a Condo or Townhome

Many first homes in Denver are condos and townhomes, especially in walkable neighborhoods like Capitol Hill. Condos and townhomes also have the most inventory right now, which gives buyers more room to negotiate. With a condo, you're buying into the building as much as the unit. Before you commit, review:

• The HOA budget and reserves. Low reserves can mean a special assessment later.
• Meeting minutes. They show what owners are worried about, like a roof, elevator or boiler that needs replacing.
• What the dues cover. Heat, water, insurance and exterior maintenance vary widely by building.
• Parking and storage. In older buildings, parking may be assigned, rented separately or not available at all.
• Loan approval. Some buildings aren't approved for FHA or VA loans, which matters if you're using one.
• Rental and pet rules. Especially if you might rent the unit out when you move up.

Mistakes to Avoid

• Shopping before you're pre-approved. You'll lose time on homes you can't buy, and sellers won't take your offer seriously.
• Draining your savings to close. Keep a cushion for the surprises every first year of homeownership brings.
• Skipping the sewer scope. It's inexpensive, and a broken sewer line in an older Denver home can be a five-figure repair.
• Changing your finances before closing. Don't switch jobs, open new credit or make big purchases until you have the keys.
• Trusting an emailed wiring instruction. Wire fraud targets homebuyers. Always confirm by phone with your title company, using a number you look up yourself.

First-Time Buyer FAQ

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