Denver house down payments are about a year of pay for most, Zillow says

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A house on West Colfax Avenue. Jan 9, 2016. (Kevin J. Beaty/Denverite)  residential real estate; house; home; west colfax; business improvement district; kevinjbeaty; denver; denverite; colorado;

A house on West Colfax Avenue. Jan 9, 2016. (Kevin J. Beaty/Denverite)<br /><br />

The median household income in Denver is about $72,000 a year, according to Zillow’s estimates. A 20 percent down payment on an average-priced home — $352,800, according to Zillow — is about $70,000.

In other words, a standard home down payment is 97 percent of annual income. I’d guess that no amount of bringing your lunch from home is going help you save that much in a year.

To add insult to injury, nationally, a 20 percent down payment on a home costs more than two thirds of the average annual income, according to Zillow. Which sounds like a lot until you’re looking at 97 percent of the average annual income for a down payment in Denver.

Even when you account for the variability in Denver home prices, it still looks not great. The Denver Metro Association of Realtors says that the median sold price of a home was slightly cheaper in December 2016: $350,000. For a single family home, it was more like $377,000. Condos are cheaper — $257,500, according to DMAR.

So at best, a 20 percent down payment could be as low as $51,500. That’s still more than 70 percent of annual pay for a lot of households.

Who says you have to save 20 percent for a down payment though? Sure conventional wisdom does, but we live in the age of disruption.

The simplest reason is the more you’re able to put down up front, the less you’ll pay out over the course of the loan. When you move under the 20 percent threshold though, you’re probably going to have to pay private mortgage insurance in case you default on the loan. Or as Zillow explains:

“Should mortgage interest rates rise in 2017 as expected, a solid down payment will become increasingly important. … A better interest rate can translate to thousands of dollars over time; on a $200,000 loan, lowering the interest rate by half a percentage point will save $20,000 over the lifetime of the loan.”

Nor does it seem that Zillow has grossly underestimated the Denver median income in its analysis of the U.S. Census Bureau, Moody’s and the Bureau of Labor Statistics. At the end of 2014, median household income was $69,205, according to the Metro Denver Economic Development Corp.

Yes, it seems there’s no way around it for most would-be homeowners in Denver. Your down payment is pretty high. Let’s just hope by the time you’ve saved it, the number hasn’t inched any higher.