If you’re wanting to buy a Colorado Springs home, you’re going to need a down payment. A down payment is money that you provide at the end of the transaction to facilitate your home loan. Most people will have to save for a while to accumulate a down payment. For some, and depending on your current finances, saving for a down payment can be a challenge.
How much do you need for a down payment in Colorado Springs?
The amount you need down will vary based on your credit, the type of loan you select, and the purchase price. Your lender will help you figure out what kind of down payment programs are available to you based on your credit and current financial situation.
A down payment is generally between 3.5% to 20% of the home purchase price. For conventional loans, you’ll need somewhere between 5-20% of the purchase price. For an FHA loan, you need at least 3.5%, in addition to some other upfront costs like the appraisal, and inspections. For veterans, a VA loan can be used with NO downpayment at all, if you qualify.
Right now (mid-2017), the median price of homes in Colorado Springs is around $260,000. Here’s what you’d need for down payments on that amount.
- 5% conventional loan = $13,000 down payment
- 10% conventional loan = $26,000 down payment
- 20% conventional loan = $52,000 down payment
- 3.5% FHA loan = $9,100 down payment
So on average, that’s $9100 to $52,000 that you’d need to bring for a down payment when you buy a home in Colorado Springs.
Where do I find money for my down payment?
If you don’t have enough money already saved, be aware that you CANNOT BORROW THIS MONEY. Your lender will object to that, strongly. You have to have the funds, seasoned in your account. You cannot have this money loaned to you to make your down payment.
So where do you find it? You’re going to have to save. Luckily, there are a ton of big and small ways to start getting that down payment together. If you need $9100 to $52,000, then that’s $758 to $4333 per month that you’d need to save to have your down payment in a year.
Ways to save:
- Quit drinking. The average American spends $1 of every $100 on alcohol. Imagine what cutting back could do for your wallet!
- Eat in – and eat your leftovers. Groceries for the week are far cheaper than eating out every day. Brown bag that lunch, stop throwing away the leftovers, and save money.
- Cut the cable. Cable, streaming services, and internet plans can suck up valuable bucks. How much do you really need, and what can you do without for year to get into that dream home? Don’t be afraid to call your provider to reduce your plans and negotiate for lower prices.
- Make your own coffee. That daily Starbucks is killing your down payment. Making your own coffee can save you a lot of money over time.
- Re-evaluate your cell phone plan. Do you really need all those minutes and data? Are you even coming close to your limits?
- Cut the frills. You know those box subscriptions that are so fun and convenient? You’re paying a premium for that convenience. You may have a half-dozen monthly subscriptions that you could easily do without. Look through your recent credit card statements to find these little luxuries and cancel them for a year.
- Gamble on yourself. Stop buying lottery tickets and put that money towards the down payment.
- Turn down the thermostat and lights. Wasted energy in the home is money out of your pocket. Put on a sweater and turn that heater down a few degrees.
- Sell stuff. Ebay, Craigslist, garage sales. Turn unused jewelry, outgrown kids clothes, those old skis you haven’t used in 5 years into valuable cash. The more you sell, the less you have to move when you buy your home!
- Get a side hustle. Turn your free time into money by getting a seasonal or temporary job, or by using your skills in your off hours. You can make significant progress on saving your down payment by investing some of your time every night.
It may not be easy, but you can do it! Remember that slow and steady progress will get you into that Colorado Springs home of your dreams.