With Cost Of Housing In Denver, How Do Conventional Loan Limits Play Into Consideration When Buying A Home?
If you just moved here, it may be a shock depending on where you’re from and how you have been getting your news on the Denver housing market. But the cost of housing in Denver has been moving up consistently for some time. If you are buying in cash this does not apply to you but if not you may be curious on how conventional loan limits play into consideration when buying a home in Denver.
According to the Denver Metro Association of Realtors, the median sales price in Denver is $446K to buy a home (up 9% since July 2016), and $330K to buy a townhouse or condo (up 10% since July 2016). So how does this correlate with conventional loan limits in Denver?
First you need to understand there is a national conforming loan limit currently at $424,100, but Denver is considered a high-cost area. So what does that mean? Well normally above conforming loan limits means a jumbo loan (larger down payments, stricter credit guides). However, in between conforming loan limits and jumbo there is a high balance allowance. This in Denver goes to $493,350 which helps bridge the gap. How is the high balance loan limit helpful for conventional loan limits? What it means is you can borrow up to $493,350 without putting down 10-20% on the house. That is right! On a conventional loan, you could put 5% down on the house. Mind you there are additional ways to stay in conforming loan limits and avoid large down payments that jumbo loans require…). Again, these are loan limits, so the home price is not what I am referring to.
To really plan accordingly, and have your loan structured to maximize your finances, start the process early and get educated. Working with a financially savvy lender will put you in the best position possible.
Given the best homes are going fast, the further you are in the process the better. Our focus in on putting you in a position to get your offers accepted! Let us know what questions you have!
Ray ~ @MortgageMaestro