A huge down payment might not be necessary to purchase a Colorado home.

One of the most frequent things we hear as Real Estate professionals helping first-time homebuyers to purchase Denver area properties is the misconception that a 20% down payment is required to obtain a home loan. In fact, the majority of homebuyers needed much less cash in order to purchase their Colorado property.

A recent report released by Down Payment Resource shows that 65% of first-time homebuyers purchased their homes with a down payment of 6% or less in the last several months.

The trend continued through all buyers with a mortgage, as 62% made a down payment of less than 20%, which is consistent with home purchases in 2016.

And an article by DS News points to the new wave of millennial homebuyers:

“It seems that the long-awaited influx of millennial home buyers is beginning. Ellie Mae reported that mortgages to millennial borrowers for new home purchases continues their ascent, accounting for 84 percent of closed loans.”

Among millennials who purchased homes in the last few months, FHA loans remained popular, making up 35% of all loans closed. What the experts are saying about low down payment programs:

“It is not surprising to see Millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. Across the board, we're continuing to see strong interest in homeownership from this younger generation.”

- Ellie Mae’s Executive Vice President of Corporate Strategy Joe Tyrrell

“Consumers do not know about these programs (low down payment assistance), and those that do assume it’s more difficult to get than it is.”

- Jonathan Smoke, chief economist of Realtor.com®

“Personal finance writers have been taking aim at lattes for years. Consumers trying to save a down payment, advisers note, waste $1,000 a year on their daily $4 shot. Give that up, they say. You'll hasten the day when you have amassed your mortgage down payment and closing costs, and are ready to buy a house. Okay. But is that really relevant? If you save $1,000 a year toward the standard 20 percent mortgage down payment, it would take you 40 years to buy a $200,000 house!”

- Gina Pogol, The Mortgage Report.

“The Federal Housing Finance Agency (FHFA) made recent strides in this direction by once again allowing Fannie Mae and Freddie Mac to secure mortgages with smaller down payments. While this is a step in the right direction, it is not enough. The FHFA must reverse its trend towards risk-based pricing in its loan guarantee fees and loan-level price adjustments. It also should prevent risk-based pricing in front-end credit risk transfers, including deeper mortgage insurance. Pricing structures are important, as they can incentivize lending that only serves those with the least risky credit profiles.”

- Nikitra Bailey, executive vice president with the Center for Responsible Lending

“The idea here is that neighborhood stabilization requires more than investment; it requires the presence of an invested home owner. And this encourages people to buy and to stay and to help build up these neighborhoods.”

- Ralph M. Perrey, executive director, Tennessee Housing Development Agency, at a press conference launching THDA's new HHF Down Payment Assistance program

If you have questions about home financing, we are here to help. We can also introduce you to a great local lending professional with access to Down Payment and other programs. Contact us to get started!

Posted by West + Main Homes on


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