Buying Your First Home in Denver, CO? Here’s How Much Money You Need to Make
The Mile High City requires lofty incomes from first-time homebuyers.
Denver, CO, is known for its mountain views, bike-friendly infrastructure, and renowned outdoor recreation. In addition to being a unique and beautiful place to live, Denver is also home to a competitive real estate market that’s seen many changes over the past few years.
For many, buying a home in Denver is a dream come true, but it’s also important to know how it will impact your finances. From down payments to monthly mortgage payments, there’s a lot to understand before buying your first home
So whether you already live in The Mile High City or are looking to relocate to the area, here’s a breakdown of the income you’ll need to purchase your first home in Denver.
Check out our original report for a detailed nationwide analysis.
How much income do you need to buy a starter home in Denver?
The median sale price of a starter home in Denver is $405,000. In order to afford this, first-time homebuyers in Denver should make $127,808 per year, up 5.6% from 2023. However, the median income in Denver is $110,552, meaning the typical resident cannot afford a starter home.
As expected, starter homes in Denver are more affordable than the average home (all price brackets combined; see methodology for details). In order to afford any median-priced home in the area, you’ll need to make $158,187 (as of October 2023).
Nationwide, you need an income of $75,849 to afford a typical starter home, which costs an average of $240,000. The average U.S. household earns an estimated $84,072.
First-time homebuyers’ guide to the Denver housing market
Denver has experienced a mixed market over the past few years, but prices have generally risen. Since January 2021, house prices have risen by 16%, from $475,000 to $565,000. However, the metro has seen large rises and drops since. Some of the most notable market changes happened in 2022 due to supply shortages, high mortgage rates, and few new listings, helping push house prices in Denver to $650,000.
The pandemic-driven housing migration boom affected Denver similarly to many coastal metros. In fact, more people looked to leave Denver than stay to close out 2022, with many buyers searching for sun and affordability. However, the region has still seen consistent growth over the past decade and only recently started slowing down.
If you’re looking to move to Denver, the area is home to an abundance of desirable amenities and attractions throughout its diverse neighborhoods. The Denver Botanic Gardens, Denver Museum of Nature & Science, and the 16th Street Mall are some of the most well known, offering beauty and enrichment for people of all ages.
Some popular neighborhoods in Denver include Baker, Capitol Hill, and Five Points.
What does a typical down payment look like for a starter home in Denver?
Here are some common down payment amounts for a typical $405,000 starter home in Denver:
Down payment percentage
Down payment amount
3% down payment
$12,150
3.5% down payment
$14,175
5% down payment
$20,250
10% down payment
$40,500
15% down payment
$60,750
20% down payment
$81,000
Down payments can range from 0% to 100% of the total house price, depending on your budget, loan type, and long-term priorities. While experts have historically recommended budgeting for a 20% down payment, the increasing cost of homes and continued sluggish wage increases has led to a 15% down payment becoming more common.
Some loan types allow for lower down payment amounts. For example, a Federal Housing Administration (FHA) loan requires just 3.5% down, while the lowest possible down payment for a conventional loan is 3%. These amounts typically depend on your credit scores, so buyers with higher credit scores may qualify for lower down payments.
What is the typical mortgage payment for a starter home in Denver?
The typical monthly mortgage payment for a starter home in Denver is $3,195. This assumes you put 3.5% down and have around a 7% interest rate.
If this payment sounds too high, you could consider renting an apartment in Denver. The average rent price is $1,883, possibly making it a better option while you save for a down payment on a house. You can also use an affordability calculator to see what you can afford based on your income and down payment.
What should you do next?
If you’re in the market for your first home in Denver, it’s important to understand how much house you can afford. Take your annual income, credit score, the current mortgage rates, and local market trends to make a decision that works best for you.
From there, a Denver agent can help you navigate the entire home buying process and provide valuable local expertise. To learn more about how to buy a home, check out Redfin’s First-Time Homebuyer’s Guide.
Methodology
Redfin divides all U.S. properties into five buckets based on Redfin Estimates of homes’ market values. There are three equal-sized tiers, as well as tiers for the bottom 5% and top 5% of the market. Redfin defines “starter homes” as homes whose sale price fell into the 5th-35th percentile of the Redfin Estimate tier.
We calculated the annual income needed to afford a starter home by assuming a buyer spends no more than 30% of their income on housing payments. Housing payments are calculated assuming the buyer made a 3.5% down payment and also take a month’s median sale price and average mortgage-interest rate into account.
The national income data is adjusted for inflation using the Consumer Price Index. 2024 income is estimated based on projections from the U.S. Census Bureau’s (ACS) 2022 median household income using the 12-month moving average nominal wage growth rate. The rate was compiled from the Current Population Survey and reported by the Federal Reserve Bank of Atlanta.
We assume housing payments include the mortgage principal, interest, property taxes, homeowners insurance, and mortgage insurance (when applicable).
All data sourced February 2024 unless otherwise stated.
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