Looking to buy a new home in Colorado? First-time homebuyers better be ready to pony up some dough.

Colorado ranks fourth in the nation for states with the highest average down payment for first-time buyers, according to a new report from Moneywise.

The website ranked all 50 states based on median home price on Zillow and an average down payment of 13%, according to the National Association of Realtors.

Using that formula, first-time homebuyers in Colorado need $72,779 to close on a median home price of $559,838. Only Hawaii, California and Washington were more expensive.

“Affordability is certainly an issue for first-time buyers, there’s no question about that,” Kelly Moye, a Realtor with Compass and spokeswoman for the Colorado Association of Realtors, told The Denver Gazette in a phone interview. “Prices have gone up so much in the past few years.”

Colorado saw gains of 18% in 2020 and 25% in 2021 as more buyers moved to Colorado during the COVID-19 pandemic — and wages did not keep pace with the housing prices, Moye said.

However, basing the rankings on an average down payment, Moye said, makes the statistic a little too broad.

“We have first-time buyers who use a 3.5% down FHA loan,” Moye said, adding that there are a number of first-time homebuyer programs to help make the dream of homeownership achievable without a big down payment.

Matt Leprino, a spokesman for the Colorado Association of Realtors, said a 13% down payment seemed a little generous for first-time buyers, since many will use an FHA loan, or a conventional loan with 5% down. If buyers can put 20% down, that’s where affordability really changes, Leprino said.

Moye said most first-time buyers tend to be young and one reason they’re staying out of the market right now is because interest rates are higher than they’re used to seeing.

“They’re used to 3-4% interest rates, so 6.5% seems scary to them,” Moye said.

That’s causing some would-be first-time buyers to sit on the sidelines and wait, Moye said.

“You’re forgetting the human emotional part — buyers have to want to buy,” Moye said.

The picture is getting better than it has been, Leprino said, as Colorado has begun to see year-over-year declines in median home price.

“Statistically speaking it is better this year than last year,” Leprino told The Denver Gazette in a phone interview. “Our affordability is increasing even though interest rates are increasing.”

Moye said she’s seeing a lot of would-be buyers playing the waiting game right now, which is causing some lenders to be more creative, such as offering a free refinance within the first five years of a loan if rates go back down.

Moye said the addition of more condos being built now could also change the formula for first-time Colorado buyers in the coming year, giving buyers a more affordable entry point.

There are better deals available in other states.

West Virginia is the most affordable for first-time homebuyers, with an average down payment of $16,783. Mississippi, Arkansas, Oklahoma, Iowa and Kentucky all came in under $25,000.

“For first-time home buyers, the challenge of finding and affording their dream home can feel insurmountable at times,” a spokesperson for Moneywise said in a news release. “But with perseverance, knowledge, and the right mortgage decision, the path to home ownership can become a reality.”

Leprino cautioned to take reports that compile national data such as this one with a grain of salt.

“All real estate is local,” he said.