Buying your first home is a major decision and an exciting milestone. It can feel daunting, but it also has the potential to change your life for the better.
You may be wondering how the housing market works, how much you need to save, and where to begin. Those are useful questions. Before you focus on finding a home, focus on getting the information you need to make a thoughtful decision.
Three steps can help: consider more than one type of home, understand your down payment options, and work with a trusted real estate professional. Here is how to put each one into practice.
1. Consider More Than One Type of Home
When there are more buyers than homes available for sale, finding a home can feel challenging. One way to increase your options is to broaden the types of properties you are willing to consider.
If your search includes only single-family homes, consider whether a condominium or townhome could also meet your needs. For first-time buyers, both can be entry points into homeownership.
Give Condos and Townhomes a Look
According to Bankrate:
“Townhomes often cost less than single-family homes of a similar size in the same location.”
That comparison matters. Rather than assuming a townhome will always cost less, look at homes of similar size in the same area. Let the available choices guide your comparison.
Bankrate also notes:
“Buying a condo can be a great way to dive into homeownership without worrying about the upkeep that comes with single-family homes and townhouses.”
If upkeep is one of your concerns, bring that into the conversation with your real estate advisor. Ask what ownership would look like for the particular properties you are considering, rather than relying only on the label “condo” or “townhome.”
Think About Your First Step, Not Just Your Final Destination
Buying a condo or townhome can allow you to start building equity. That equity can increase your net worth and may help support a future move. It is a possibility, not a guaranteed outcome.
You do not have to decide immediately that one property type is right for you. Start by comparing your options and asking:
- Am I ruling out a condo or townhome without first considering it?
- How do the available homes compare in size, location, and price?
- What questions do I have about upkeep?
- Could one of these homes fit the way I want to live?
The goal is not to talk yourself into a home you do not want. It is to avoid overlooking a choice that could work for you.
2. Find Out What Down Payment You May Need
Saving for a down payment can feel like one of the biggest obstacles to buying your first home. Before you assume the amount is out of reach, make sure your savings target is based on your options, not a common misconception.
The National Association of Realtors, or NAR, explains:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”
Separate Historical Averages From Your Requirements
The historical NAR data cited in the original article showed that the median down payment had not exceeded 20% over the period discussed. Its cited Home Buyers and Sellers Generational Trends Report put the median down payment for all buyers at 13%, with lower median down payments among younger buyers.
Those figures describe the buyers covered by that research. They are not a current market reading or a statement of what you personally must put down.
The practical takeaway is that you should not assume you need a 20% down payment. You may not need to save as much for a down payment as you initially thought.
Ask About Loan Options and Assistance
Some loan options allow down payments as low as 3.5%, or even 0%, for buyers who qualify. Down payment assistance programs are also available for many buyers.
That does not mean every buyer qualifies for every option. It means you have questions worth asking before setting your savings goal.
There can also be advantages to putting 20% down. The point is not that a smaller down payment is always better. It is that you should understand the choices before deciding which direction to pursue.
Talk with a mortgage professional and ask:
- Which loan options might fit my situation?
- What down payment would those options require?
- Could I qualify for down payment assistance?
- What should I consider when comparing a smaller down payment with 20% down?
Use that conversation to clarify how much you may need to save and what help may be available.
3. Work With a Trusted Real Estate Advisor
You do not have to navigate the homebuying process alone. A trusted real estate professional can help you understand the steps, explore your local market, and make informed decisions along the way.
Start With the Basics
If you are just beginning, a real estate professional can explain the process and connect you with a trusted lender to pursue pre-approval.
Bring your questions, including the ones that feel basic. Ask where to start, what comes next, and what you should understand before beginning your search.
Get Support Through the Search and Offer
When you are ready to look at homes, your advisor can help you understand the local market and find available properties. This is also the time to revisit whether condos or townhomes belong in your search.
When you find a home and want to make an offer, that professional can serve as an advisor and negotiator, helping you work toward an offer that stands out. That support does not guarantee your offer will be accepted.
Your Next Step: Turn Questions Into a Plan
Knowledge can help you approach homeownership with more confidence. Understanding your market, your down payment options, and the homes available to you gives you a clearer place to start.
Write down the property types you would consider, your down payment questions, and where you need guidance. Then reach out to Ed Parcaut to discuss your mortgage options and the next steps toward buying your first home.
