Colorado mortgages: high prices, low tax rates and CHFA assistance

#High prices, low tax rates: Colorado’s trade-off

Colorado’s median home value ranks 6th-highest among the states and DC, well above the US median of $360,600. Household incomes are high as well ($97,113, 9th-highest), and the median home costs 5.9 times the median income, higher than the national ratio of 4.4.

The offset is property tax. Census data put Colorado’s effective rate at 0.49% of home value, against 0.89% nationally. Even with expensive homes, the median bill of $2,828 is only the 29th-highest in dollars, and on the median home the Colorado rate costs $192 a month less than the national ratio would.

#What the median Colorado home costs each month

Keeping that payment within Freddie Mac’s 30% guideline takes an income of about $170,100. The median household’s budget of $2,428 a month supports about $328,000 — $246,600 below the median home value. Try your own numbers in the mortgage payment calculator or the affordability calculator.

#CHFA’s grant or second mortgage: which to choose

The Colorado Housing and Finance Authority (CHFA) offers down-payment assistance with its first mortgages, through participating lenders. You pick one of two forms:

Buyers with a permanent disability and first-generation homebuyers can get up to $25,000 through specific programs regardless of the first mortgage amount. CHFA calls a homebuyer education class early in the process essential.

The grant costs nothing later, so it is the better deal when it covers enough of your cash gap. The larger second mortgage helps most when cash is the binding constraint, but it comes due when you sell or refinance. Either way, compare the CHFA first-mortgage rate with what you’d get without assistance. More options are in the down-payment grants guide.

#Colorado property tax and the senior exemption

Colorado taxes residential property on a share of its actual value set by the state’s residential assessment rate, which the legislature has changed several times in recent years; local mill levies then apply to that assessed value. That makes a single statewide rate a rough guide. Use the county assessor’s valuation and the latest tax bill on the home you are considering.

Older buyers should know about the senior property tax exemption: owners who are 65 or older and have owned and lived in the home for 10 years in a row can exempt 50% of the first $200,000 of actual value — up to $100,000 of value off the tax roll. Because the ownership clock restarts with a new purchase, a buyer won’t qualify on a newly bought home right away. Applications run from January 1 to July 15 through the county assessor.

#A documentary fee instead of a transfer tax

Colorado has no large statewide transfer tax. Instead, the county clerk collects a documentary fee of 0.01% of the price — about $57 on the median home. Several mountain resort towns levy their own real estate transfer taxes, so check locally if you are buying in one. Closing costs otherwise run the CFPB’s typical 2%–5% of the price, or $11,492–$28,730 on the median home; the closing cost estimator itemizes them. For prices, taxes and city programs in the capital, see the Denver guide.