Homeownership is for everyone – including young people

Homeownership is an intimidating process that many people think is too complicated or expensive for them to pursue. Historically, candidates for first-time homebuying were in their mid-20s through their early 30s. The generation that is currently within this age, millennials, carries $1 trillion in student loan debt, exponentially more than any previous generation. For some people, this debt fills the line in the budget previously allotted for housing.

Whether or not student loan debt is a factor, many young people assume that they could never afford to buy a house. Others believe they simply don’t need to buy a house. And while homeownership may seem out of reach, it is achievable and beneficial for most people with planning, budgeting and education. We’re debunking four homeownership myths to help you see how attainable and helpful homeownership can be for young people.

1. I have to have a 20% down payment to buy a house.

A down payment is the amount of money a homebuyer puts forward at the time of sale. While conventional mortgages require a 20% down payment to buy a house, there are other common mortgage loan types with more manageable down payment requirements. Federal Housing Administration and Veterans Affairs loans are great options for many young people and first-time homebuyers, and they require as little as 3.5% down. There are also down payment assistance programs offered by local and state governments for down payment assistance. Through these programs, qualified buyers can buy a home with 1.5% down. That makes the amount of money you have to save to start the process more affordable. 

2. It’s cheaper to rent than it is to own.

One of the best things about purchasing a home is the control you have over what you spend. As you’re looking at houses, your mortgage lender can tell you the estimated cost you’ll pay per month for each house you’re considering. One thing that surprises UHI clients is that you can often finance a home so your mortgage payments are less than what you’re currently paying in rent! You can absolutely find a home that fits your desired monthly payment – below, at or above what you’re currently paying in rent.

3. I don’t have a partner, so I could never afford the payments.

Homeownership is not dependent upon your relationship status. Many young homeowners can afford to purchase a home and live on their own, but some people like the company of roommates. As the homeowner, you act as the landlord to your roommates, collecting rent to help cover your mortgage payments.
Depending upon the size of your house, the number of roommates you have and your monthly mortgage note, you might be able to free up some of your personal budget to save for unexpected repairs, home renovations or other expenses.

4. I’m taking on a lot of risk buying a house – I don’t want to be stuck here forever.

Any major investment assumes some risk, and a house is no exception. However, property and a home are some of the most stable investments a person can make. You’re never guaranteed equity, but most homes appreciate in value over time. So, if you’re planning on staying in your current city for the next few years, you’re likely to make a little bit of money if you buy a home. Buying a home is an investment in yourself and your future – renting is an investment in someone else’s property.