Ah, homeownership. The lure of harvesting vegetables from your very own garden, selecting your own wall colors (hasta la vista, landlord-mandated color schemes), and actually having a front lawn to mow/play cornhole is hard to resist. It’s an almost taken for granted aspect of the “American Dream,” and for many, the starting line for accumulating asset-based wealth.
For most, the first step toward homeownership involves making a down payment—which usually requires that you pay around 20% of the overall home price up front. Though most would probably prefer not to, there are some benefits to this step: it lowers the overall amount of money you need to borrow, it (usually) enables you to avoid paying mortgage insurance, and it can help you learn to view homeownership as a long-term goal.
Despite these well-known pros, most Americans aren’t even able to set aside $500 for emergencies, let alone pay a down payment on a home. In May of 2017, a report released by the Denver Metro Association of REALTORS showed the median price of a single-family home in Denver to be a whopping $417,800. What’s worse, even buyers looking at houses below that median price would, in most cases, be required to pay a down payment of at least $80,000 to avoid mortgage insurance. Holy unaffordable! For those with the added burden of student loan debt, the ability to save 20% may seem as unlikely as winning the lottery. Even the director of home finance for the Colorado Housing and Finance Authority (CHFA), Dan McMahon, agrees: “It’s unrealistic for many.”
While the concerns surrounding unaffordable homeownership in Colorado are certainly growing, don’t panic just yet. CHFA has been helping Coloradans through the changing housing market since 1974, aiming to “strengthen Colorado by investing in affordable housing and community development.” This includes providing down payment assistance and home loan programs that actually make housing seem pretty affordable. How about them apples?
CHFA’s program works to make mortgages more affordable by providing 3% of the down payment—so long as homebuyers acquire their mortgage through one of its participating lenders. There are also income limits (dependent on your household size and the county you want to live in) and a minimum FICO credit score (620).
For the newbies, CHFA requires a homebuyer’s education class to help you gain more information about the process, and how to maintain your new investment. However, the program isn’t limited to new homeowners alone—those who have previously owned their own place can also qualify.
McMahon estimates CHFA’s average down payment assistance to be $6,000—and that monetary assistance is helpful to more than just the buyer. By making the process of purchasing a home more affordable up front, CHFA allows people to spend more money in their local communities, thereby benefiting the Colorado economy. To date, CHFA has generated $142 billion in economic output in Colorado. That’s a lot of cash!
No matter where you are at on the road to homeownership, it’s never too early to begin planning. With proactive thinking and a little help from organizations like CHFA, the dream of owning a home is never too far away. Get ready to plant that garden.