Let's Talk Down Payments
I'll be straight with you: buying in Colorado's mountain towns isn't cheap. The median home price in places like Vail or Telluride can easily hit seven figures, and even "starter" condos in Frisco or Silverthorne might run $500K+. So how do people actually come up with these down payments?
The Standard Approach (That Still Works)
For a primary residence, putting down 20% avoids PMI and gives you the best rate options. On a $600,000 property, that's $120,000—a big chunk of change. But here's what a lot of people don't realize: you don't always need 20%.
Conventional loans can go as low as 3% down for qualified first-time buyers. Yes, you'll have mortgage insurance, but it's not permanent like it is with FHA. Once you hit 20% equity (through payments or appreciation), the PMI goes away automatically.
Second Home Considerations
If you're buying a vacation property, lenders typically want 10-20% down, depending on the loan program. The property has to meet certain occupancy requirements—you'll need to use it yourself at least 14 days a year and can't rent it out more than 180 days annually to qualify for second home treatment.
Why does this matter? Second home rates are better than investment property rates, so it's worth structuring your purchase correctly from the start.
Creative (But Legitimate) Approaches
Gift funds from family members are completely acceptable for your down payment. We see this often with younger buyers whose parents or grandparents want to help them get established in the mountains. There's paperwork involved, but it's straightforward.
Seller concessions are another tool. In the current market, some sellers are willing to contribute 2-3% toward your closing costs, which frees up more of your cash for the down payment. This works better in areas with more inventory.
For those with retirement accounts, there's a first-time homebuyer exception that lets you withdraw up to $10,000 from an IRA without the early withdrawal penalty. Not saying it's right for everyone, but it's an option worth knowing about.
What Doesn't Work (Despite What You Might Read Online)
You can't borrow your down payment on unsecured credit. Any large deposits in your bank account within 60 days of closing will need to be documented. The days of "don't ask, don't tell" in mortgage lending are long gone—and honestly, that's a good thing for market stability.
Ready to map out your down payment strategy? Let's talk through your specific situation and figure out what makes the most sense for you.
