Planning for your first home usually starts with location, and there is probably none more ideal for having a starter home than in Colorado.
Consider these conditions: Two of its cities – Boulder and Denver – were named by online media firm, US News and World Report as the 1st and the 14th in rank among the best places to live in the country for 2021-22 respectively. Moreover, a 2020 study by Move.org reveals that Colorado placed 4th among the most moved-to states.
The fantastic quality of life and the number of economic opportunities here are the biggest crowd-drawers to the Centennial State. So, if you want to join the 5.7 million-strong Colorado population, proper planning is key.
Budget requirements for down payment
The first thing to plan for is to save for a down payment but how much you’ll allot toward this will depend on a number of factors. If you’re taking out a mortgage for your starter home, there are several options available to you:
- Conventional loan. Typically, the down payment for this type is around 20% of the home’s total selling price. You can go lower but you will also have to pay the private mortgage insurance alongside your monthly mortgage.
- FHA (Federal Housing Authority) Loan. Should you qualify, down payment can go as low as 3.5%.
- USDA (U.S. Department of Agriculture) Loan. There are certain locations that allow you to qualify for this loan. No down payment is required.
- VA (Veterans Affairs) Loan. Available to military servicemen, veterans, and their families. No down payment is required.
- CHFA (Colorado Housing and Finance Authority) Loan. You need to attend a CHFA-facilitated homebuyer education class and pay at least a $1,000 down payment.
Where to place funds for down payment
Once you know how much to allot for a down payment, the next question is where to keep it. Below are several popular options:
- Regular bank account. You can use your personal bank account for this or you can open a separate account dedicated solely toward your down payment savings.
- Investments. If you’re adept in market movements and you have time in your hands, an investment account is the best option for you. This financial tool has the ability to let your money grow exponentially over time and there are many venues to choose from. Some markets are more volatile than others, though, so choose your investment wisely.
- Time deposit. Savings accounts of this nature have assured growth. However, your money cannot be touched until after the lock-in period. This is the best option if the release date of your deposit complements the schedule you set for making the actual down payment.
The time to save is now
Whether you plan to start your home-buying journey in Colorado a few more months from now or several years down the line, saving money for the down payment is something you must do immediately. It’s much easier to make concrete plans knowing you have a sure source of funding stashed away.
Saving up for your first home can also be done gradually – as little as $10 a month will do. By the time you feel you’re ready to buy your Colorado home, you’ll be surprised by the amount you’ve saved.
Want more guidance? We, the Noel & Martinez Team, will be happy to serve you! Simply contact us here to take advantage of excellent, professional, responsive, and knowledge-driven services that have placed us among the top-ranked Realtors in Colorado.
