Author

Nathan Beauchamp

Nathan moved his family from Chicago to Denver several years ago and hasn't looked back. He works as a loan consultant for New American Funding and specializes in helping Chicagoans make the move to Colorado. On the weekends you'll find him on his mountain bike in the high country. He is the author of 4 novels in the award-winning Universe Eventual series from Centrifuge Press.

How Much Do I Need for a Down Payment
Finance,

How Much Do I Need for a Down Payment? The Answer May Surprise You

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One of the most common questions I get asked as a lender is How much do I need for a down payment?

The question comes from both first-time buyers and those who are purchasing their fourth home in the last 25 years. The reason it comes up so much is that there’s a lot of confusing information (or misinformation) on the topic floating around the web.

For example, check out this article: Millennials Need a Decade to Save for a Down Payment, Says Study.

A decade sounds daunting, maybe even impossible for many buyers. Articles like this one make home ownership sound like climbing Mount Everest. And they’re flat out wrong for a variety of reasons.

How Much Do I Need for a Down Payment

Saving for a down payment shouldn’t feel like climbing Mount Everest!

According to a recent study conducted by Harris Poll interviewing 2,000 Americans, 44% believe they need a 20% down payment to buy a home

That’s the number that comes up again and again: 20%. The reason that number has such staying power, is that 20% if where lenders stop charging PMI or private mortgage insurance.

Down payments less than that amount require the buyer to pay for an insurance policy on themselves against default on the mortgage. (PMI is a complicated topic that deserves its own blog post—I will cover it in detail in a future post).

However, 20% is far more than most buyers put down when purchasing a home

The average down payment is closer to 8% according to the National Association of Realtors. And 8% is far more than most lenders require, especially for first-time home buyers.

How Much Do I Need for a Down Payment

You don’t need a massive down payment to purchase a home.

Many people believe they should put down the largest possible down payment. However, sometimes you’re better off with a smaller down payment, especially for a first-time buyer.

 

How much do you really need for a down payment? The answer depends on what sort of loan you apply for. Most American’s end up with a loan from one of the 4 major players in home finance:

  • Fannie Mae
  • Freddie Mac
  • FHA
  • VA

All of these are government backed in one way or another. Fannie and Freddie are known as “GSEs” or Government Sponsored Entities. That means that when the lender you’re working with funds the loan, it is backed by a guarantee from Uncle Sam. FHA is similar, but run by HUD (Housing and Urban Development). VA falls into its own unique category, which we’ll get into in a bit.

If you apply for a “Conventional” loan, your loan will be underwritten and guaranteed by either Fannie Mae or Freddie Mac. They’re the major players, and underwrite and guarantee most loans in the United States.

Fannie Mae and Freddie Mac require a minimum 3% down payment for a first-time home buyer. You read that right.

 A 3% down payment will get you into a new home if you are a first-time buyer

You must be a first-time buyer to put down only 3%, but there’s an interesting caveat: Fannie and Freddie define “first-time” as someone who hasn’t owned a home in the last 3 years. If you owned a home 3+ years ago and are now buying again, you will qualify with a 3% down payment.

If you have good credit and are purchasing in Colorado, it gets even better: You can qualify for a mortgage with a 1% down payment!

New American Funding, the company I work for, has a unique program for first time buyers with good to excellent credit. We offer a 1% down payment program with a 2% grant (free money) that comes directly from us!

Sound too good to be true?

It’s not.

Here’s how the 1% down payment program works

We require the buyer to bring 1% of their own funds, and then back that up with a 2% grant which we pay to get the borrower to the 3% required by Freddie Mac. The money really is a grant, which means its free, no strings attached. For a buyer purchasing a $300,000 home, that’s $6,000 in free money.

The rates and terms on these loans are almost identical to those on a standard conventional loan. The rate is slightly higher, usually about .125% to .25% more than someone putting down 3% of their own money, but for a buyer with limited liquid assets, it can be the different between buying a home now or waiting several more years.

The 1% down program is unique to New American Funding. We are the only lender in Colorado that offers it

So what if you’re not a first-time buyer? What is your minimum down payment?

The answer is 5%, unless you go with a FHA loan.

Freddie and Fannie require 5% for buyers who have owned a home in the last 3 years

FHA on the other hand, requires 3.5% regardless if you are a first-time buyer or are purchasing your 10th home. FHA also works with buyers who have less than stellar credit. For folks who have had a bankruptcy or foreclosure in the last few years, FHA is the way to go.

FHA has some downsides (one of which is higher PMI or private mortgage insurance rates), but they would require their own blog post to cover in detail.

Which brings us to VA

If you are currently serving in the armed forces or were honorably discharged, you will qualify for a VA loan that requires NO down payment. Veterans purchasing a new home can put down 0%. It’s the lowest requirement in all of lending, but only applies to service members and veterans.

The best answer to the question How Much Do I Need for a Down Payment? is It depends on your unique circumstances, goals, and objectives.

You need to talk to a professional who can help determine what you will qualify for based on your credit, income, and a comprehensive understanding of your finances. Your needs are unique, and working with a knowledgeable lender who can talk you through every aspect of your transaction.

I’ve worked as a mortgage lender for almost fifteen years and have helped hundreds of clients buy homes in seven different states. I can help you determine what you’ll need, and find the right program that gets you into your dream home for the lowest possible cost and with the lowest possible rate.

You can read what my past clients have to say about me by clicking here. New American Funding has 26,000+ reviews with an average 4.9/5.0 rating.

My contact details are in my signature

Denver Neighborhods
Living in Denver,

Metro Denver Neighborhoods – A Breakdown

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Denver Neighborhoods – The Basics

If a move from Chicago to Denver is in your future, you might be wondering where exactly you’d like to call home. It might seem like an overwhelming task trying to figure out where to begin researching neighborhoods in the city. While I could probably write a book on everything you might want to know, no one has time for that. Here’s a very brief breakdown on some of the major Denver neighborhoods you should consider.

Denver Neighborhods

Chicago and Denver both feature diverse neighborhoods.

Baker

Just west of Wash Park is the historic Baker neighborhood. One of the oldest parts of Denver, this area was first developed in the 1870s. Dotted with gorgeous Victorian homes and newer apartment buildings, Baker is right off the great food and shopping on Broadway.

Berkeley/Highlands/Sloan’s Lake/Sunnyside

These five locales are all in close proximity to each other on the northwest side of the city and have all seen a tremendous change in the past several years. Turn of the century (20th that is) homes and new builds, along with some of the best dining in the city, make this area popular for visitors and residents alike. Here are links to neighborhood groups in the area:

Berkeley

Highlands

Sloan’s Lake

Sunnyside

Capitol Hill

As its name implies, Capitol Hill makes up the area surrounding the Colorado State Capitol Building. This Denver neighborhood features some single family homes, but many of the old mansions that line the streets have been converted into apartments. It’s also home to many of the city’s museums, art studios and restaurants.

Denver Neighborhoods

The State Capitol Building
Image Courtesy of Wikipedia

Five Points

Once known as the “Harlem of the West,” Five Points is one of Denver’s oldest and most diverse neighborhoods. It is currently experiencing a renaissance of sorts and is home to an eclectic mix of coffee shops, restaurants, and culture.

Green Valley Ranch

Green Valley Ranch is one of the fastest growing parts of the city. With new homes for affordable prices, this neighborhood in the eastern part of the city is highly desirable.

River North

This old industrial part of the city has seen a revival as the city’s art hub. Old warehouses and factories have been transformed into studios, markets, clubs and coffee shops. New housing has also popped up the area, making “RiNo” one of the most popular parts of the city.

Stapleton

The Stapleton area of east Denver is one of the newest neighborhoods in the city. Once home to the old Stapleton Airport, redevelopment has converted  new homes and plenty of shopping. It has quickly become one of the hottest areas in the city for young singles and families alike.

Washington Park

Denver Neighborhoods

Beautiful Washington Park
Image Courtesy of Wikipedia

Wash Park is one of the most popular Denver neighborhoods (and also one of the most expensive!) It is located in the south central part of the city and is populated with many single family homes surrounding the largest park in Denver. The western part of the area is home to a younger crowd with many condos located near great dining and shopping on Broadway.

This is by no means a comprehensive list of neighborhoods. Head over to denver.org for even more information.

Have questions about any of these Denver neighborhoods (or any that didn’t make this list)? Drop us a note in the comments section.

Metro Denver not your cup o’ tea? Check out our comprehensive post on Jefferson County and the suburbs it contains.

Human hand working with laptop networking technology
Uncategorized,

Why the Colorado DMV is Worse than the Illinois DMV

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Denver and Colorado in general have a lot to offer a Chicago transplant.

Here’s a short, not-even-close to comprehensive list:

Needless to say, there’s a reason why many Chicagoans are moving to Denver Colorado!

However, there’s one surprising place Illinois has Colorado beat: The DMV

Yes, you read that right.

Colorado has a worse DMV than Illinois. You might be asking how that’s possible. As a long-time Chicago resident, I spent unrecoverable days’ worth of my life in seemingly endless lines at the Lexington Street Secretary of State Facility. I’d rank going to the DMV right up there with filing my taxes and getting a root canal.

So how can the Colorado DMV be worse than Illinois?

If you’ve spent any time in Illinois, you know doubt have heard the name Jesse White, the Secretary of State. His name was plastered on express ways signs, outside and inside the DMV, as well as other government offices. There was even a lawsuit about it years ago, that resulted in the state court deciding politicians could no longer put their name on tax-funded signage.

One Surprising Way Illinois has Colorado Beat

Illinois Secretary of State, Jesse White

Love or hate the guy, (and opinions certainly vary), Jesse White did one thing well: reform the Illinois DMV. Long, long lines become far shorter. Time spent at the DMV went from hours to thirty minutes or less on a good day. The improvements were noticeable across all Secretary of State Offices in the Chicagoland area.

Someone needs to do the same thing here in Colorado.

When I first moved to Colorado, I felt so proud of my new state that I wanted a new mountain-green license in my wallet. So days after moving into my short-term apartment, I perused the Colorado Department of Revenue webpage, made a list of the required paperwork to get a new-resident license, and arrived at the Golden CO DMV location bright-and-early on a Monday morning. I smiled at the man who opened the doors for the thirty of us lined up outside. I had my paperwork in hand, and despite the throng of other people entering the facility, wasn’t planning on letting this bureaucratic necessity put a dent in my mood.

I could see the north face of Green Mountain from the parking lot. I’d biked those trails just the day before. I was in Colorado. The start of a new, exciting life that I’d put several years into making happen. I wanted to be here, and no amount of paperwork or dealing with steely-faced bureaucrats was going to change that!

And then the man who opened the door pre-screened my paperwork and sent me home without a license. Why? Because in Colorado, you must provide proof of your social security number when getting a new license. I pulled up the Department of Revenue webpage on my phone, and scanned the same information I’d read before drive out to the DMV. Sure enough, I found the requirement, after nearly ten minutes of searching.

It wasn’t very clear on the webpage, which they have since changed. It’s still not great. Here’s what it says, verbatim:

The Identification Requirements chart shows the documents you need to present to a driver license employee to prove the following elements: full legal name, date of birth, identity and lawful presence. In some cases, a single document may be all you need. However, you may need to bring multiple documents to prove all four elements. All documents presented must be certified originals, certified amended originals or true copies certified by the issuing agency. If you cannot prove each of the required elements with the documents set forth in the chart, then you may be referred to Exceptions Processing to prove the required elements with additional/alternative documents.

You will need to present your proof of your Social Security number.

Proof of address and appropriate payment is also required. Your local driver license office can provide more information.

Why is the proof of SSA requirement broken out in its own line? It’s easy to miss, if you read the larger paragraph that comes before it—especially if you click on the link that explains the Identification Requirements. And why not use BULLET POINTS to make processing the information easier?

Outside the DMV, I ran into another new resident to CO who’d made the exact same mistake that I had.

Frustrating, but solvable. I drove back to my apartment, pulled out my US Passport and my most recent paystub that showed my SSN, and drove back to the DMV.

The place was now entirely full. 100+ people at 9:45am on a Monday morning.

I took my number, sat down, and started to wait.

And waited.

And waited.

And waited.

10:30 came and went.

Then 11:00.

Then 11:30.

I went to the next-door Subway, bought a BMT with Chipotle sauce, and came back to find my number was still dozens of numbers away from being called.

They didn’t serve me until almost 1pm. I didn’t get my license until after 3pm.

 It took, all told, over 6 HOURS to get a license!

I’ve since learned that the DMV location off of 6th in Golden is among the slowest in the Denver area. I don’t know if that is true. It may be that other locations are far faster. But I’m now scarred in a way that I’ve needed hours of counseling to get over.

Not really. But you get what I mean.

So, if I had to pick something I miss from Chicago (aside from the Lakeshore path or the plethora of awesome hole-in-the-wall ethnic restaurants), I’d pick the DMV.

Jesse White, they may have forbid you form plastering your name on expressway signage, but you’ll always be a hero to me.

Planning your own trip to a Colorado DMV? Here’s a few helpful tips:

  • Bring more documentation than you think you’ll need

Bring your IL (or other state license), your passport, and something that documents your SSN. Also bring proof of residency in CO. Generic mailers won’t work. Bring a utility bill, signed lease, or other proof of residence.

  • Arrive at your local facility early

I tried to do this, but not having my proof of SSN ruined that plan. Get there at least 15 minutes early so that you spend as little tile having your will to live destroyed as possible.

  • Use Google to find out which locations have faster service times

Google search has a nifty feature that will let you check the busiest times at a business (or government office) and even tell you if the business is more or less busy than usual in real time:

Real-time information can help you avoid the busiest times.

You can use this information to either plan to visit at a less-busy time, or to strike when the iron is hot and visit when the business is less busy (like when I took this screen shot).

  • Hope for the Best / Plan for the Worst

Even if you do everything right, you may end up at the DMV for far longer than you anticipated! Don’t make an annoying task more stressful by not giving yourself enough time to complete your business. Plan on it taking half a day. If it takes less than that, awesome.

Bad DMV experience aside, I’m still THRILLED to live in the Denver area. My only regret is not moving here sooner. If you’d like to learn more about why my wife and I moved to Denver, read this post. If you’re considering moving from Chicago to Denver, you’re in the right place! You can find information on neighborhoods, schools, activities, crime rates, and a whole host of other topics here at the Chicago to Denver Blog.

Have a specific question? Drop it in the comments box below and I’ll get back to you. I promise I will be faster than the Colorado DMV!

Sample Post
Uncategorized,

Why We Started the Chicago to Denver Blog

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I moved my family from Chicago to Denver in the summer of 2016.

You can read why we made the move from Chicago to Denver here. It was a major transition for all four of us! My wife and I are both from the Midwest, and lived in Chicago for fourteen years before uprooting and moving west. Needless to say, it was a HUGE decision for our family, one we put a lot of thought into before making it a reality.

Chicago to Denver

Subaru, U-Haul Trailer, Bikes, and my Family before leaving my mom’s place for the 1600-mile trip west.

 

We spent the better part of eighteen months planning our move from Chicago to Denver.

We read everything we could get our hands on, studied up on neighborhoods, schools, crime statistics, economic data, etc… Talked to realtors. Called school districts and asked questions. We wanted to get everything right the first time around, and not have to move again after we arrived in Denver!

And we mostly did get things right. We had a short-term rental in Golden, and then purchased a home in Lakewood a few months later. The reason things went smoothly for us was because we sunk a lot of time into research. We knew the key facts about all the neighborhoods within striking distance of our jobs before we ever crossed the Colorado state line.

One of the main reasons I created the Chicago to Denver blog was that I could share everything we learned about moving from one great city to another.

While I could have started a blog based solely on my family’s experiences, I wanted to get insight from others who made the move from Chicago to Denver, and from those who’ve lived in Colorado for most decades. That’s why I’ve partnered with Lisa Reich and Aimee Skul. Lisa works a realtor in the Denver market. She lived in Chicago for years before moving to Denver, and while I have more recent experience in moving from Chicago to Denver, she’s been “on the ground” here a lot longer. She has a tremendous amount of experience living and working in Denver.

Aimee and her husband Tommy have worked as Farmers Insurance agents in the Denver market for almost a decade. As insurance agents, they’re very familiar with Denver-area neighborhoods and communities, and some of the unique rewards and challenges of living at the foot of the Rockies.

Between the three of us, we offer our readers a unique blend of experience, knowledge, and insight into the Denver area.

As professionals working in the Denver market, we offer our readers a single stop where they can find information on neighborhoods, traffic, school districts, public transportation, outdoor activities, economic data and comparisons, etc.… Everything I wanted to know before I moved my family to Denver, but often had a hard time finding.

Consider Chicago to Denver a clearinghouse of information and useful advice on how you can move your family from Chicago to Denver with as little difficulty and as few headaches as possible.

We’re here to serve you. All of the information we’ve gathered here is free, and it always will be. We’re also here to answer specific questions about moving from Chicago to Denver. If there’s something you’d like to know that you can’t find in our index of blog posts, just drop a comment below, or e-mail us. We’d love to help.