Renting vs. Buying a Home in Denver, a 2017 Analysis

What’s the cost of renting versus buying a home in Denver, in 2017? This is a common question among Denver-area renters who are considering the purchase of a home. And we have a fully updated rent-versus-buy analysis that could help you answer this question.

Summary: In many cities across the U.S., home buyers could afford the monthly payments on a house for about the same as what they would pay in rent, or even less. Denver is one of those areas where buying could be cheaper than renting, when compared on a monthly basis.

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Renting vs. Buying a Home in Denver: 2017 Update

Earlier this month, the real estate information company Zillow published a housing study that compared the costs of renting and buying in Denver, Colorado, as well as other cities across the country.

Their in-depth analysis showed that renters in Denver could buy a house without increasing their monthly housing costs. In some cases, the monthly housing costs could actually decrease after buying, depending on the situation.

Here’s a breakdown of the renting-versus-buying cost comparison for 2017:

  • Denver’s “Zillow Rent Index” (an estimate of the median monthly rent payment) was $2,000 as of March 2017.
  • The median home price in the city was around $377,500, during the same month.
  • If we assume a down payment of 10%, which is a common range, that would give us a loan amount of $340,500.
  • At current average mortgage rates, the monthly payments on a 30-year fixed loan of that size would come to around $1,630. (We’ve excluded taxes and insurance for the sake of simplicity.)
  • So in this real-world scenario, the monthly cost of buying a home is cheaper than renting in Denver.

This is true for much of the U.S., according to Zillow’s analysis. Nationally, the median rent is currently more expensive than what the monthly mortgage payments would be for a median-price home.

According to Zillow’s Chief Economist, Dr. Svenja Gudell: “Renters hesitant to enter the home buying market for fear of not being able to find an affordable home should be encouraged to discover they may have more options than they thought.”

Of course, this scenario just looks at the financial factors relating to renting or buying a home in Denver, during 2017. There are other things to consider as well, including home maintenance, lifestyle, amenities, and how long you plan to stay in the house. But when it comes to monthly housing costs, buying can be cheaper than renting in Denver.

Minimizing Your Down Payment

Down payments play a big role here as well. When considering the rent-versus-buy question, you have to look beyond the monthly costs. Home buyers usually encounter upfront costs as well, and the down payment can be the most significant.

But there are some myths and misconceptions regarding the down payment on a house. One of the biggest misconceptions is that Denver home buyers have to put 20% down when buying a house. That’s not always true. In fact, modern mortgage programs allow for down payments as low as 3% of the purchase price, in some cases. Military members who are eligible for VA financing can buy with nothing down.

Additionally, the down payment funds could be provided by a third party, such as a family member or close friend. This is know as a down payment gift.

The bottom line is that renters who compare the costs of renting and buying a house in Denver in 2017 might be surprised by what they find. In many cases, the monthly costs of owning a home can be equal to — or even less than — renting a place.

Want a mortgage payment estimate? If you’ve been dreaming of buying a home in the Denver area, and you’d like to know how much your monthly payments might be, please call or email us. We can provide you with a rate quote and a monthly payment breakdown, so you can make an informed decision.