For most people, owning a home is one of the centerpieces of financial independence. If you can buy a home and set a floor on your housing costs, it gives you a great deal of financial freedom, especially when you retire.

But housing these days is getting expensive, particularly in cities like Denver.  According to Zillow, the average cost of a home in Denver is about $400,000, which is around 8 percent more than last year. In early 2012, the average cost was roughly $215,000, which means prices have been appreciating at about 10 percent a year.  For most people, their household income hasn’t risen 10 percent a year. Thus, housing just keeps getting more expensive.

This is true in many cities that become hubs for technology and high-skill jobs, as Denver is becoming.  Places like San Francisco, Seattle, Washington, Boston and New York simply have not gotten cheaper. Given what we know about rising housing costs in attractive cities, if you want to stay here, you may have to stretch to buy that house now.

Today, lending rules have been relaxed, and it’s easier to qualify for a mortgage. There are federal lending programs that allow you to push your monthly debt payment up to 40 or 45 percent of your household income. That means if you have household income of $100,000, your annual debt service costs could be as high as $40,000 to $45,000.

Basically, the lender looks at your monthly mortgage cost and then adds up the minimum payments you owe on any other debt, such as auto loans, credit cards and student loans. That total has to be below their lending threshold.  You can push the envelope on borrowing. But should you?

The conservative answer is no. If you push it that high, any hiccup in your finances could put you into default and foreclosure. Your other option is to continue renting, but are you much better off renting? Consider that your monthly cost for a $400,000, 30-year mortgage at 4.5 percent is around $2,000. That isn’t too much higher than simply renting a two-bedroom apartment in the city, where rents can easily run between $1,700 and $2,000 a month.

Plus, if you buy your house, your payments are fixed, yet your rent is likely to keep rising over the years. When you eventually pay off your house, then there are no payments and it’s much easier to retire. Although it’s risky to stretch your finances, there are longer-term benefits that may be worth it.

The biggest challenge most people face with buying a home beyond their comfort zone is the down payment.  But that’s gotten easier as well. There are several different lending programs that allow borrowers to put down as little as 3 percent to 4 percent for a down payment. On a $400,000 house, that’s roughly between $12,000 and $16,000. Now, these loans carry higher fees and interest expense, but that’s the cost of borrowing if you don’t have a big down payment. You’ll want to compare lenders to see which one offers the most appropriate loan options for your needs.

Surprisingly, there are also organizations that can help some folks fund a down payment.  These programs are sponsored by the Department of Housing and Urban Development (HUD).  HUD often provides funding to state and local agencies that then use the money to assist homebuyers. The assistance sometimes comes as a grant or a loan.  You can go to the HUD site and look at the options available in Colorado. There are more programs than you might think.

Another option is to borrow the down payment from your 401(k) plan. In general, borrowing from your retirement plan is a bad idea. But if you are using the funds to buy a house and fix your future housing costs, then it can be a good investment.

You can usually borrow up to $50,000 or 50 percent of your account balance, whichever is less.  You can inquire with your employer about borrowing and repayment options. But be careful, because if you can’t pay it back, the loan is treated as a taxable distribution. If you happen to have an IRA or Roth IRA sitting around, you can access up to $10,000 of funds without a tax penalty if you qualify as a first-time home buyer.

All of these programs have technical requirements and tax issues. You should consult your own financial adviser before going down any of these paths to ensure you understand the costs and risks.  If you don’t have an adviser, you can search for a housing counselor in your area with help from the Consumer Financial Protection Bureau.

There are no easy solutions when you live in a metro region with rapidly rising housing costs.  Renting doesn’t help much as your housing costs just keep rising with the rent.  Moving to a cheaper region often isn’t a realistic option because of your job. So, stretching to own while you still can may be your best bet.

Above material is for information and education purposes only.  It does not constitute tax, legal or financial advice. Consult your individual financial adviser for guidance regarding your specific circumstances before making any financial decisions. All investments involve the risk of permanent losses.

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