Getting a Mortgage in Denver

A mortgage is a loan that allows you to finance the purchase of your Denver area home. Until you’ve completely paid off your loan, your lender holds a deed of trust on your property. Whether you’re a first-time homebuyer in Colorado or an experienced buyer looking to move within Metro Denver, understanding the mortgage process is crucial for making informed decisions in today’s competitive market.

Choosing the Right Mortgage Type for Denver Buyers

Start by selecting the mortgage type that best fits your financial situation and Denver homeownership goals. Fixed-rate mortgages keep your interest rate constant throughout the loan term, providing predictable monthly payments—ideal for long-term Denver residents. Adjustable-rate mortgages (ARMs) typically offer lower initial rates but can fluctuate with market conditions, which might work well if you plan to sell or refinance within a few years.

Selecting Your Loan Term

Most Denver homebuyers choose between 15-year and 30-year mortgage terms. A 30-year mortgage offers lower monthly payments, making homeownership more accessible in Denver’s competitive market, though you’ll pay more interest over time. A 15-year mortgage features higher monthly payments but allows you to build equity faster and pay significantly less interest—perfect for buyers with strong income stability.

Getting Pre-Approved: Essential for Denver’s Competitive Market

Before house hunting in Denver, Aurora, Lakewood, or anywhere across the Front Range, get pre-approved for your mortgage. The pre-approval process gives you a clear budget and demonstrates to sellers that you’re a serious, qualified buyer—crucial in Colorado’s fast-moving real estate market.

Credit Score Impact on Denver Mortgages

Your credit score significantly affects your mortgage terms and interest rates. Higher scores unlock better rates, potentially saving thousands over your loan term. If your score needs improvement, consider working with a credit counselor before applying, so you can maximize your buying power in Denver’s market.

Understanding the 28/36 Rule for Colorado Buyers

Denver area lenders typically follow the “28/36 rule” when evaluating conventional mortgage applications. They expect no more than 28% of your gross monthly income to go toward housing costs and no more than 36% toward total debt obligations. This helps ensure you can comfortably afford your Denver area home.  VA and FHA rules allow for a little more flexibility.

Down Payment Strategies for Denver Homebuyers

Your down payment amount affects your loan terms, monthly payments, and competitiveness in Denver’s market. Larger down payments reduce your loan amount, may eliminate private mortgage insurance (PMI), and make your offer more attractive to sellers. While some programs like FHA loans allow down payments as low as 3.5%, putting down 20% or more strengthens your position significantly in competitive Denver neighborhoods. 

The Principal Team has a special program for heroes, including educators, first responders, active-duty military and veterans that helps defray some of your out-of-pocket costs when you purchase a home with us. For Veteran and active-duty military home buyers, the VA loan offers 0% down.

Beyond Your Mortgage: Total Cost of Denver Homeownership

Factor in additional costs beyond your mortgage payment: Colorado property taxes, homeowner’s insurance, and possibly PMI if you put down less than 20%. These expenses vary by location within Metro Denver, so work with experienced local agents who understand neighborhood-specific costs.

Ready to start your Denver home buying journey? Contact our experienced team for personalized guidance.