Home Buying Guide for Denver, Colorado 2024
Understanding the Denver Real Estate Market
- Single-family homes: $605,000 (1.6% increase year-over-year)
- Townhouses: $574,990 (1.7% decrease year-over-year)
- Condominiums and Co-ops: $346,750 (2.0% increase year-over-year)
Explore The Different Neighborhoods in Denver, CO
Capitol Hill
Five Points
Find the best homes for sale in Denver, CO today!
Your Journey with Us is Simple
Step 1
Find out your credit score
Your credit score determines your eligibility for a mortgage and influences your mortgage rate - the higher your credit score, the lower your rate. Most mortgage providers require a minimum credit score of 580 to 620. You can check your credit score from the three credit reporting bureaus - Equifax, Experian, and TransUnion.
Ideally, you should check your credit score for 6 to 12 months before applying for a mortgage loan. Doing so allows you to improve your credit score, if necessary.
Step 2
Lower your debt-to-income ratio
Your debt-to-income (DTI) ratio is the percentage of your monthly gross income going towards debt repayment. Lenders use this to see how much mortgage payment you can afford. They prefer your DTI ratio to be no higher than 36 to 43 percent of your gross income. Some mortgage lenders will allow you to borrow despite a high DTI ratio if you have a high credit score or a large cash reserve.
If your current DTI ratio exceeds the percentage range above, you can lower this by paying off as much debt as possible before a mortgage application. These include auto loans, credit cards, student loans, and other loans.
Step 3
Set your budget
You need to determine how much you can afford for your future house. Start by computing how much monthly mortgage payments you can afford, which is recommended to be no more than 30% of your monthly gross income. Once you have identified this amount, you can use a mortgage calculator to find out the total budget for your new home.
Step 4
Save up for the down payment
Conventional loans require at least a 3 to 5 percent down payment. A lender will confirm you have the capacity to pay the amount by asking for copies of your bank statements.
If you don’t have enough in your bank accounts, some lenders will allow you to use gift funds to cover a portion of the down payment.
Step 5
Research mortgage loan programs
It is important to find potential loan programs before talking to a loan officer. Find out the terms for the down payment, the monthly mortgage payments, private mortgage insurance, and the time to repay the full amount. Ideally, you want the mortgage with the lowest down payment, monthly payments, and the shortest time to pay off the whole amount while avoiding private mortgage insurance.
Step 6
Get pre-approved or pre-qualified for your chosen mortgage plan
Getting yourself pre-approved for your mortgage loan can make the house buying process smoother. This is a necessary step since most realtors and sellers will only entertain you if you are a buyer with a pre-approved or pre-qualified mortgage loan.
Determine your preferred residence and interior design
Identify the specific features you want for your neighborhood
Identify your ideal neighborhoods in Denver
You need to identify what you want and need for your home. Once you have done so, list down which are non-negotiables and which ones are nice to have. Below are some questions to give you an idea of what you might need or want in your future home:
- Do you want an apartment, townhouse, or single-family home as your residence?
- How much space do you need in your garage?
- How big of a yard are you looking for?
- Do you prefer a new or existing home?
- What kind of layout do you want in the residence?
- How many rooms and bathrooms do you require?
- How much square footage do you need?
- What are the particular features that you are looking for (home office, swimming pool, deck, etc.)?
