Let’s jump right in. Buying your first home is an exciting dream for many new couples, but eventually, you have to take steps to make that dream a reality. Here are three tips to buy a house in your twenties.
1. Save a 10-20% Down Payment
To buy a house, you need to have a down payment of at least 10%. We were able to save 20% and I’d recommend that if you’re able to do it. Anything under 20% results in private mortgage insurance (PMI) which adds money to your monthly payment and gives you nothing in return.
Practically, this means if you want to buy a house that’s $250k, you need to save AT LEAST $25k, and should really save more like $50k if you can.
When you have a higher down payment, you owe less debt on the home, your interest paid over time is lower, and your monthly payments are less.
2. Find a Great Realtor
One of biggest “make or break” parts of the home buying process is your real estate agent. If you have a bad agent, you’ll get into a home you regret buying, and if you have a great agent, you’ll get into an awesome house.
Your agent should put your needs first and cover your back. Our agent told us “no” on a few homes we liked because there were things about them that we wouldn’t like later on. As a result, he told us “yes” to the best possible house for us. If your agent doesn’t tell you “this isn’t the one,” go somewhere else.
Great agents will…
- Know the area you want to live
- Give you honest feedback
- Understand the market value of a home
- Help you close and get a good deal
- Guide you to the best home possible
3. Live Below Your Means
As a 20-something, it’s easy to get sucked into the trap of spending all of the money you’re bringing in. Often times, you have your first “adult” job that pays a salary or an hourly rate much higher than minimum wage. You might be tempted to eat out frequently, get a high-rent apartment, take out a car loan or buy a new car, or spend any excess money you have. Do. Not. Fall. For. It.
The BEST way to save money is to live below your means. Spend less than you make and save the rest.
To buy your first house, you might need to:
- Keep driving the (paid off) car you’ve had since high school
- Eat at home a lot more often
- Rent an apartment that’s a small portion of your income
- Get a roommate
- Say “no” to expensive trips and weekends out
- Get a side hustle or pick up extra shifts
You’ve got this! It’s totally possible to buy a house when you’re young. Make the necessary sacrifices and buy within your budget.