How Much House Can I Afford in Denver, Colorado, in 2018?

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How much house can I afford to buy in Denver, Colorado, if I purchase a home in 2018?

This is a common question among home buyers in the Mile-High City, especially since house values have risen steadily over the last couple of years. Here’s a look at current home prices, loan limits, and other factors that might determine how much house you can afford in Denver, Colorado in 2018.

Current Home Prices in Denver, Colorado

Denver has been one of the hottest real estate markets over the last couple of years. Strong demand and limited supply have put tremendous upward pressure on home prices. As a result, house values rose steadily during 2016 and 2017. This will affect how much house you can afford to buy in Denver, if you purchase in 2018.

According to the real estate information service Zillow, the median home value for Denver rose to $386,700 as of October 2017. That was an increase of 7.8% from the same month a year earlier.

While the company’s economists expect prices to continue rising in 2018, they’re also predicting a slower rate of growth. A recent Zillow forecast predicted that the median home value for Denver would rise by 3.1% over the next 12 months (ending in November 2018).

According to a November 2017 report from the Denver Metro Association of Realtors, “sellers are beginning to reduce prices.”

Loan Limits Might Affect How Much House You Can Buy

There are limits to how much you can borrow when using an FHA, VA or conventional conforming loan. These “loan limits,” as they are known, can vary from one county to the next because they are based on median home values.

The loan limit for a single-family home purchase in the Denver-Aurora-Lakewood metropolitan area is $493,350, as of 2017. This limit applies to FHA, VA and conventional home loans.

These limits could go up in 2018, due to significant home-price gains that occurred during 2017. We will update our website if and when such changes occur.

Update: New loan limits were announced on November 28, 2017. The new (and higher) conforming limit for Denver County is $529,000 for a single-family or “one-unit” home. This applies to both conventional and VA loans. FHA mortgages have their own caps, which you can find here.

What Percentage of Income Should I Put Toward a Home?

To determine how much house you can afford to buy in Denver, you might want to think of it in terms of income percentage.

Most mortgage lenders will limit you to a certain “debt-to-income ratio” when you apply for financing. As the name suggests, this is simply a comparison between your monthly earnings and recurring debts. You can think of it as a protective measure, to prevent you from taking on too much debt with the addition of a mortgage loan.

In 2018, most lenders will set the bar somewhere around 43% – 50%, for the total debt-to-income ratio.

Many financial experts recommend that home buyers spend no more than 36% of their gross monthly income on housing payments. But this is a general rule of thumb that does not apply to all situations. Some people are comfortable with (and capable of) managing a higher level of household debt. It varies from one home buyer to the next.

Just keep these numbers in mind, as you try to figure out how much house you can afford to buy in Denver.

Getting Pre-approved for a Mortgage Loan

If you have a basic housing budget on paper, and you feel that you are ready to enter the real estate market and make a purchase, mortgage pre-approval is a logical next step.

This is where the mortgage lender reviews your financial situation to determine how much they are willing to lend you. The lender will look at your income, assets, recurring debts, and other aspects of your financial situation. Then they will give you a maximum loan amount.

Disclaimers and notes: This article answers the question, how much house can I afford to buy in Denver if I purchase a home in 2018? We have presented some general guidelines that might not apply to your particular situation. Only you can determine where your financial comfort zone lies. We recommend putting a basic budget on paper, before you even speak to mortgage lenders.