No, You Don’t Need 20% Down To Buy a Home in Colorado

By Greg Smith

BoulderHomeSource represents the region’s finest properties with exceptional skill, using the most innovative technologies currently available. BoulderHomeSource offers ultimate privacy, security, speed, and efficiency. The team’s years of full-time experience have given them a clear understanding of the mindset of home buyers and sellers and a thorough understanding of the regional marketplace.

Many buyers think they need a 20% down payment to buy a home, but that’s not true. If you’re still renting because you’re trying to save a large down payment, you might be missing an opportunity to be a homeowner. Most homebuyers I help purchase homes with far less than 20% down. Some even buy homes without any down payment. The real issue isn’t a lack of money; it’s believing the common myth about down payments. Here’s what you need to know if you’re serious about buying a home:

Low-down-payment loans exist. Many buyers use loan programs that require much less than 20%. Here are the most common options:

• VA Loans (0% down): Veterans can buy homes with no down payment. If you qualify, you could move into homeownership immediately.
• FHA Loans (3.5% down): First-time homebuyers frequently use FHA loans because they require a small down payment.
• Conventional Loans (as low as 3% to 5% down): These loans are available through many lenders. They are great for buyers who don’t qualify for VA or FHA programs.

Mortgage insurance is not a deal breaker. If you put down less than 20%, you’ll pay mortgage insurance. Some buyers worry about this, but it usually isn’t a big issue. Buying sooner often outweighs the extra cost of mortgage insurance. Also, mortgage insurance can eventually be removed when you build enough equity.

Renting costs more than money. If you’re paying $2,000 per month in rent, that’s $24,000 each year going into someone else’s pocket. You gain no equity and receive no tax benefits. If you own a home, even if your mortgage is higher, such as $3,000 per month, part of your payment reduces your mortgage principal. You’re building equity. You might also get tax deductions on mortgage interest.

Saving rarely beats rising prices. Many buyers believe they’ll save more money to afford a large down payment. Unfortunately, home prices often rise faster than people can save. Waiting longer usually means paying higher prices later.

Know your budget and get clear guidance. Buying a home becomes simpler when you clearly understand your finances. Work with an experienced real estate agent and mortgage broker. They can show you exactly what you can afford, match you with the right loan programs, and determine if you qualify for down payment assistance.

Homeownership is easier than you think. You just need to know your options for purchasing a home without needing that 20% down payment. Partnering with the right agent will also help you make this more achievable. If you’re delaying because of the 20% down payment myth or you have questions about buying a home, feel free to call or text me at (303) 543-5720 or email me at mclean@boulderhomesource.com. I’m here to help you get started.