It’s Hard to Outsave the Market!

Being a first-time homebuyer has always been challenging, especially in Boulder County. The situation was just as difficult 40 years ago, although the figures were different back then. When I began selling real estate in Boulder in 1978, houses in the Baseline Subdivision (east of 30th Street and north of Baseline Road) were priced at $27,000. I recall showing one to a buyer who thought it was absurd that these houses were $27,000 and believed they would never exceed $30,000. It seemed like a significant amount of money at the time, almost insurmountable for a first-time homebuyer. Additionally, mortgage interest rates continued to rise through the mid-1980s, reaching as high as 16%. Now in 2024, those same Baseline Subdivision homes are selling for over $750,000, which is the entry level for single family homes for the city of Boulder. That rise in value over 45 years translates to an average of 7.76% annual increase over time, through the ups and downs of the real estate market. That kind of appreciation rate makes it very difficult to save for an appropriate down payment. 

While it’s never easy to be a first-time home buyer, now is the time to pay attention and get rolling to purchase a first home. Interest rates are still historically low, relatively speaking, and there are financing programs available with lower than 20% down payment required. Appreciation is still continuing so waiting for interest rates to come down is not a great idea.

First-time homebuyers often face the challenge of saving the down payment for their initial purchase. In the city of Boulder, loan limits can increase the difficulty by raising the required down payment. However, in the rest of Boulder County, as well as in Weld and Larimer counties, property values, loan limits, and loan programs might create the ideal conditions for making that first home purchase.

1. Federal Housing Administration (FHA) loans
FHA loans have long been the “go to” loan program for lower down payments and credit scores. In fact, if the price of a home and the loan limits line up, a homebuyer can be approved with a 3.5% down payment. The current loan limit for Boulder County is $856,750, so it barely scratches the surface to be helpful within the city limits of Boulder, with the least expensive single-family home in the $750,000 range. The median priced home in the city of Boulder in 2024 was $1,400,000. However, in Longmont, where the median priced home is at $567,000 there is plenty of room for FHA financing. Mortgage Insurance is required for FHA loans which allows the lender to accept more risk. The disadvantage to the homebuyer is the additional expense of the mortgage insurance.

2. Colorado Housing Finance Authority (CHFA)
CHFA and its lender partners have helped over 100,000 homebuyers in Colorado achieve homeownership. In fact, CHFA provides homebuyer education classes, helping first-time homebuyers learn the process of buying that first home. CHFA programs generally mirror the shape of FHA programs. The current loan limit of $726,200 makes it tough to help within the city limits of Boulder. However, it is within range in some areas of Boulder County.

3. U.S Department of Veterans Affairs (VA)
Lacking a local military base, Boulder County has never been a huge VA market. However, we do have veterans who choose Boulder County as their home, and they should definitely compare VA financing opportunities with other options. Typically, VA loans are generous in terms of no down payment and tend to be more lenient in terms of qualifying. There is no VA loan limit but contact your lending professional for details on qualifying.

4. U.S. Department of Agriculture (USDA)
Years ago, we used to call these Farm Home Loans. In fact, these loan programs target rural areas. When I started selling real estate in 1978, even Lafayette and Louisville still qualified for these loans. No longer! Today, you can still get them in rural areas of Boulder, Weld and Larimer Counties. Even though the name implies that the property is a farm, this is not necessarily the case. Some of their programs allow 100% financing. There are geographic limits, income limits and loan limits, which apply making it a bit difficult to fit into their mold, but it might be worth contacting your lending professional to see if you do.

5. Conventional-Fannie Mae and Freddie Mac
Conventional loans, widely known as Fannie Mae and Freddie Mac loans, provide a mortgage base to the housing industry. These institutions created by Congress, provide liquidity to banks and mortgage companies that make loans to finance the purchase of homes. For first-time homebuyers, loans with 3% down are available as long as the homebuyer qualifies for the monthly payment. In Boulder County, the loan limit is $856,750.

6. Home Renovation Loans
Maybe all the fix and flip TV shows make renovating a home a common desire for first-time homebuyers in order to save money by buying a fix-up property. There are a few loan programs out there if this is the direction you want to go.

FHA 203(k) loans are designed for homebuyers who would like to rehabilitate a home. This FHA loan bases the value on the improved value of the property and thereby finances the improvements within the first mortgage. This program still comes with a 3.5% down payment.

Fannie Mae and Freddie Mac also offer home renovation loans that will include the cost of improvements within the first mortgage and a 3% down payment.

7. Teachers, Police Officers and Firefighters
There are loan programs for specifically designed to help teachers, police officers and firefighters buy their first home. The benefits could include low down payment and a more attractive interest rate.   

8. Down Payment Assistance
CHFA, mentioned above, offers down payment assistant grants that do not need to be repaid, if you qualify, CHFA even offers second mortgage loan programs that can contribute to your down payment when you are using a CHFA first mortgage loan program

The State of Colorado has created the First-Time Homebuyer Savings Account program. A maximum of $50,000 can be contributed to it and can grow to $150,000 without accruing state income tax. This homebuyer savings account allows people other than a homebuyer to contribute to the fund, such as family members or even wedding guests!

*Check with local municipalities for other possible down payment assistance programs.

In summary, now is the time to get on track to buy your first home! Check with your REALTOR® and mortgage lender to come up with a plan that works for you.

By Duane Duggan. Duane graduated with a business degree and a major in real estate from the University of Colorado in 1978. He has been a Realtor® in Boulder since that time. He joined RE/MAX of Boulder in 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail [email protected], call 303.441.5611 or visit BoulderPropertyNetwork.com

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