For many first time buyers, homeownership can feel like a goal that keeps moving further into the future. Between rising everyday expenses, home prices, and the challenge of building savings, it is easy to assume you will need several more years before buying becomes realistic.
But the timeline may be shorter than you think.
Two decisions in particular can make a meaningful difference: choosing a more affordable first home and reconsidering how much you actually need for a down payment.
Understanding these options could put homeownership within reach sooner without requiring you to wait until you have saved 20%.
Look Beyond the Purchase Date
When deciding whether buying makes financial sense, it helps to consider more than simply whether you can afford the initial purchase.
One important benchmark is the break even point. This is when the overall cost of owning a home becomes roughly equal to what you would have spent renting over the same period. After that point, owning may become the more financially favorable option.
Kara Ng, Senior Economist at Zillow, puts it this way:
“Buyers should think about not just when they can afford to buy, but how long they’d need to stay before owning makes more financial sense than renting.“
That makes the timeline important.
According to Zillow, saving enough for a 20% down payment on a typically priced home can take about 8.5 years. Reaching the point where the cost of owning catches up with renting can take another 6.2 years. Combined, that is nearly 15 years.
But those numbers are based on a particular scenario. They assume you purchase a home around the middle of the market and put 20% down.
Neither of those choices is required.
Adjusting the type of home you buy, the amount you put down, or both can significantly change the numbers. Your local housing market matters too, since home prices, rents, taxes, insurance, and other expenses vary from one area to another.
Start Smaller and You May Start Sooner
Your first home does not have to be your forever home.
A starter home generally falls within the more affordable portion of the local housing market. Depending on where you live, that might mean a condo, townhome, smaller single family home, or an older property with fewer upgrades.
Choosing a home at a lower price point means you may need less money upfront. That alone can shorten the amount of time required to save.
The difference can be substantial.
Zillow found that, nationally, the combined timeline for saving for and financially breaking even on a starter home is approximately 7.2 years, about half the timeline associated with a more typically priced home.
That estimate includes roughly 4.6 years of saving followed by approximately 2.6 years to reach the break even point.
A starter home will not solve every affordability challenge, and it may require some flexibility with size, location, features, or finishes. But for buyers whose priority is becoming homeowners sooner, expanding the search to more affordable properties can open possibilities that might otherwise be overlooked.
And if you have already spent several years building your savings, you may be further along than you realize.
Twenty Percent Down Is Not the Only Option
Another misconception can make buying feel unnecessarily far away: the belief that you must save 20% of the purchase price before you can buy.
For many buyers, that simply is not the case.
According to the National Association of Realtors, the median down payment among first time buyers is 10%.
Depending on the buyer and loan program, the required amount can be considerably lower.
Some conventional loan programs may allow qualified buyers to purchase with as little as 3% down. Qualified buyers using FHA financing may be able to put as little as 3.5% down, while eligible VA and USDA borrowers may have access to financing that does not require a down payment.
That does not automatically mean putting less money down is the right choice for everyone. Your monthly payment, mortgage insurance, cash reserves, interest rate, and long term plans all need to be considered.
But knowing that 20% is not an absolute requirement can completely change how you approach your homebuying timeline.
There may also be programs available to help with some of the upfront expense.
Down Payment Resource reports that there are 2,746 homebuyer assistance programs nationwide. In some cases, qualified buyers may even be able to combine eligible programs.
“Some homebuyers can layer multiple sources of assistance to reduce their upfront costs. Layering means combining more than one eligible source of funding as part of your home purchase.”
That is why exploring your options before deciding you are not ready can be so valuable.
A lower priced home, a smaller down payment, and available assistance programs can work together to reduce the amount of cash you need before making a purchase.
Your First Home Does Not Have To Be Perfect
One of the biggest shifts first time buyers can make is separating the idea of a first home from the idea of a forever home.
Your first purchase can simply be the home that makes sense for this stage of your life and finances.
Starting with something more affordable may give you an opportunity to begin building equity while creating a foundation for a future move. Instead of waiting until you can afford every feature on your wish list, you may be able to start with what works today and build from there.
Bottom Line
Homeownership may be closer than the traditional 20% down payment mindset makes it seem.
Considering a starter home, exploring lower down payment financing, and looking into available assistance programs could significantly shorten your path to buying.
If buying your first home is one of your goals, let’s look at the numbers together and see what homes in our area may fit your budget today.
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