Your First Home Can Be Your Dream Home

What comes to mind when you think of a “starter home”?

Historically, the terms “Cheap,” “run-down,” and “bad investment” may have popped up. However, in recent years first-time buyers are turning the notion of a starter home on its head, here’s how: 

Say Goodbye to 20% Down

Contrary to popular belief, you don’t need to fork out 20% of a home’s value for a down payment. In fact, you might not even need half that, the average American during Q1 of 2024 was putting down 13.6% according to an article written by CNBC. This includes first time buyers and move up buyers so the average for first time buyers is likely even less. 

Some loan options such as USDA or VA offer 0% down options if you qualify. FHA is typically around 3.5% while most conventional loan options vary from 3-5% minimum down payment required but down payment assistance can reduce that number even further.

Many homebuyers are taking advantage of lower down payment options, while they may have to pay mortgage insurance (resulting in increase to monthly payment) it allows them to keep more cash on hand, pay cash for improvements on the home after closing or invest their funds elsewhere.

Start your first conversation with your personal loan officer by talking about your budget and your down payment. What you can afford right now will help your personal lender find suitable options for your first mortgage. 

Consider Renovation Loans

Want to get the new home feel in an established neighborhood without having to fork over extra money or get your contractors license after closing? 

Renovation loans will allow you to purchase a home and roll the cost of that new kitchen, bathroom, windows and even additions into the mortgage upfront. With Conventional FHA, VA and USDA options available, qualifying will easily fit your needs.

Ugly House? Not your type?

Don’t judge a book by its cover. This old adage holds equally true when it comes to buying a home. It’s important to focus more on what’s inside than outside because aesthetics (cosmetic fixes) are the easiest aspects to fix in a home. 

Do your very best to look past the hot pink door and concentrate on what’s more challenging to fix, like plumbing or insulation. Doors can be painted for next to nothing; bad plumbing, on the other hand, could break the bank.

Your personal lender can work with you to see what the monthly payments would look like on the loan if you have an idea of what the renovations will cost. This can help you decide if you can afford to make bigger renovations or if you should stick with something that requires only minor updates. 

Priorities Matter

Is it a dream home that you want or a dream location? You have to prioritize what is the most important and if you’re willing to sacrifice other things in order to get your dream home. For instance, if you’ve always wanted to live in the heart of New York City, then your dream home may look more like a 1,000-square-foot condo than a 4,000-square-foot cabin. 

Everyone’s dream space is different. Making a list of priorities and deal breakers will help you isolate what exactly puts the “dream” in a dream home.

Take Your List to Your Personal Lender

The bottom line is: your first home doesn’t have to be a “starter home”. Such a life-changing investment should be something you can be proud of in the long term. 

Convinced you want to go after your dream home now, but not sure if it’s in the stars (aka the bank)? Check out our tips on how to buy a home when you think you can’t afford it. 

Want to get started now? Complete our Quick Start Form, and we’ll connect you with a loan officer matching your needs. They’ll provide a free consultation and guide you through every step of the loan application process.