Table of Contents:
- Understanding Colorado’s Real Estate Market
- Financial Preparation for Buying Your First House
- Getting Pre-Approved for a Mortgage
- House Hunting
- Post-Purchase Considerations
- Ready to Take the Next Step Towards Homeownership?
Whether you’ve lived in Colorado for your whole life or you’re a new resident of the state, buying your first home here can feel overwhelming. With rising home costs and a competitive housing market, getting your foot on the real estate ladder may seem impossible. But with preparation ahead of time, you could be holding the keys to your new home sooner than you think.
Understanding the Real Estate Market in Colorado
Colorado is home to over 450 cities and nearly 6 million people, so there’s plenty of choices for where you want to call home. Denver is the largest city in the state, but also has one of the most competitive housing markets. Prices here went up 2.5% in 2024, with the median house price around $620,000.
The housing market throughout the state moves fast, with many homes going on and off the market within only 2 days. That’s why it’s essential to be prepared ahead of time—know your budget, know what mortgage amount you can be approved for, and know exactly what you’re looking for in a home.
Denver, Boulder, and Colorado Springs all rank highly nationally in best places to work and best cities to live in lists. But that also means real estate comes with a larger price tag. However, there are plenty of job opportunities in various industries throughout these cities, particularly in technology, insurance, and higher education.
Financial Preparation for Buying Your First House
Before you think about looking at homes to buy, you’ll need to start financially preparing to buy your first home. If you don’t already have a budget that you’re working from, list your income and expenses for each month to see what money is coming in and what’s leaving your accounts. Track all of your transactions for several months to get a better idea of what your spending habits look like.
You’ll then want to start budgeting for your future as a homeowner. Alongside your monthly mortgage payment, you’ll also need to account for additional home expenses such as property taxes, homeowner’s insurance, and, if you plan to put down less than 20% as a deposit, mortgage insurance. You’ll also be responsible for utilities, any HOA dues, along with closing and moving costs when you move forward with a purchase.
Once you own your home, you’ll also be responsible for any regular and unexpected maintenance costs. Aim to save around 1% of your home’s value each year for any costs that may come up, from minor expenses like replacing air filters in your HVAC system to a new appliance or roof.
Your credit score will also play a critical role in the amount of money you’ll be approved for in your mortgage. Make sure that you’re current on paying all of your bills, paying off debt frequently, and that you don’t have too many new credit accounts opening around the same time. A good credit score can lower your interest rate on your mortgage, which means you’ll be paying less each month.
Another crucial part of preparing for home ownership is saving for your downpayment. Setting up an automatic transfer to your savings account each month is a great way to get this fund started, particularly if you find saving a challenge.
You should also review your budget and see what areas of discretionary spending you can cut back on to put more into savings—could you eat out less or have fewer shopping deliveries made? You could even consider adding a part-time job or gig work to your schedule to increase your income each month until you’ve reached your savings goal.
Colorado also offers a number of down payment assistance programs that can support first-time homebuyers, without saving up a large amount of money on their own for their downpayment. The Colorado Housing and Finance Authority (CHFA) has a program that helps you offset the cost of buying your first home, if you have a credit score over 620, complete a homebuying education program, fall within the income limits, and pay at least $1,000 towards your new home.
Getting Pre-Approved for a Mortgage
In a competitive housing market, being pre-approved for a mortgage before you begin looking for a home can put you one step ahead of other buyers when you make an offer on a property. Pre-approval is a letter from a lender that shows the maximum loan amount they’re willing to give you. These letters are typically valid for 60-90 days and are the first step in the mortgage process. They’re a great way to show sellers that you’re qualified to buy their home.
To get pre-approved, you’ll need to provide a lender with proof of income like W-2 wage statements and tax returns for the previous 2 years, proof of assets that you currently have like a downpayment. You’ll also need a credit score of at least 620 for a conventional loan and 580 for FHA loan.
You will likely need to provide verification of your current employment, or business records for several years if you’re self-employed. Other documentation such as personal identification will also be needed for preapproval.
House Hunting
This is where the fun begins! Before you head out house hunting, think about a few key areas such as:
- Your wants vs. needs. Think about the non-negotiables, like number of bedrooms, whether the home has a backyard, and the price. Features you’d like to have like a two-car garage, or walk-in closets shouldn’t be essentials, but can be things you look for.
- Location, size and type of house. Generally, these are all aspects you won’t be able to change. Location in particular is very important—think about how close the home is to necessities like shops, medical centers, schools, and work. You’ll want to look at neighborhoods at different times of day to see how the atmosphere changes and if you’re comfortable at all times.
Once you have a list of what you’re looking for, you’ll want to communicate this clearly to your realtor. They’ll help you find homes within your budget that are as close as possible to your wants and needs.
When you’ve found a home you want to make an offer on, you should always consider having a home inspection completed. This can help you identify any areas of the property that need to be fixed, which you can ask the seller to do before closing or ask for a discount on the purchase price to take care of these yourself.
Post-Purchase Considerations
Congratulations, you’re now a homeowner! When you’ve closed on your house and you’re getting ready to move, look for reputable movers to ensure a successful move. Before you leave your current residence, sell or donate any unwanted items so they’re not cluttering up your new place. Transfer all of the utilities and change your postal address at work, schools, and medical facilities.
You’ll want to keep an eye on any regular maintenance that your home needs, particularly moving into autumn and winter. Colorado winters can be particularly harsh, so disconnect any hoses or sprinkler systems, clean out gutters, and service major appliances like your heating system.
Especially if you’re new to the area, get involved in your local community through local organizations. Sports clubs, hobby-based organizations, non-profits, and after-school clubs are always looking for volunteers to help out!
Ready to Take the Next Step Towards Homeownership?
There’s plenty to think about when you’re buying your first home, but it’s an exciting process so take your time to enjoy it and find the right home for you. The key to a successful purchase is preparation, so find a Colorado mortgage lender that works with your financial situation and a realtor who understands exactly what you’re looking for.
At Citizens State Bank, we’re more than just a bank. We’re a part of your community, and we’re committed to helping our neighbors succeed. We’ve been serving Colorado since 1913, and we’re proud to continue that tradition by helping first-time homebuyers like you.
We understand that buying a home is a big step, and we’re here to guide you through every part of the process. From setting a budget to closing on your new home, our friendly, professional team is ready to provide the support you need.
So why wait? Start your homeownership journey today with Citizens State Bank. We’re here to help you make your dream of owning a home in Colorado a reality. Contact us today to learn more about how we can help you on your path to homeownership.