As a seasoned real estate agent in Colorado, I know that one of the biggest hurdles for many first-time homebuyers is saving up for a down payment. A down payment is the money you pay upfront when you purchase a home, and it’s typically a percentage of the total purchase price. In Colorado, the average down payment for a home is around 3.5-20% of the purchase price, depending on the type of loan you are using. In this post, I will share some tips on how to save for a down payment for a house in Colorado.

Set a savings goal:

The first step to saving for a down payment is to set a savings goal. Start by determining how much money you need to save for your down payment. You can use online mortgage calculators to estimate your monthly mortgage payments and figure out how much you need to save for a down payment. Once you have a savings goal in mind, set a timeline for achieving it.

Create a budget:

Creating a budget is essential to saving for a down payment. Take a look at your current spending habits and identify areas where you can cut back. For example, you could reduce your expenses by cooking at home instead of eating out, canceling subscriptions you don’t need, or reducing your entertainment expenses. Use the money you save to build your down payment fund. If you are already used to kissing that money goodbye, maybe try “paying yourself” that money you’d be paying for the cancelled subscription. This is going to be about creating a habit of saving money, so setting a goal and sticking to it will be essential for saving up faster, and creating healthy spending at the same time.

Open a dedicated savings account:

Consider opening a dedicated savings account for your down payment fund. This will help you keep track of your progress and prevent you from dipping into your savings for other expenses. Some banks offer high-yield savings accounts that can help you earn more interest on your savings.I know PayPal offers a 4% savings account, so if you know realistically it’s gonna take you about a year to save, why not have your money make you money?

Look for down payment assistance programs:

In Colorado, there are several down payment assistance programs that can help you save for a down payment. These programs provide grants or loans that can be used for your down payment or closing costs. Some programs are available to first-time homebuyers, while others are available to anyone who meets certain income and credit requirements.

Chafa is a great program that offers down payment assistance. The government will essentially loan you the 3.5% you’d need for the down payment. There’s no such thing as a free lunch, so there’s typically an origination fee that goes with this, but a lender can crucnh these numbers with you and see if it makes sense for you.

Other programs like Front Range Heroes, is a program that a close friend and lender of mine created, where he and I partner together to help all first responders, VA, Teachers and Medical Professionals get some, if not all of their closing costs paid for, and sometimes even get a check back at closing!

Give me a call and I explain more options further:)

Increase your income:

Increasing your income is another way to save for a down payment. Consider taking on a part-time job or side hustle to earn extra money. Some great side hustle ideas could be driving for Uber or Lyft, or dog walking, because who doesn’t agree with me that most dogs are better than most people. Another option could be asking for a raise or promotion at your current job or look for higher-paying job opportunities.

Saving for a down payment may seem daunting, but with the right plan and discipline, it’s achievable. Remember, the more you can save for your down payment, the less you’ll have to borrow, which means lower monthly mortgage payments and potentially lower interest rates. If you’re interested in buying a home in Colorado, I’d love to help navigate you through the home buying process!