Can You Buy a House When You Might Not Be Able to Afford it?
First-time homebuyers often face many hurdles. Home prices are still rising, mortgage interest rates are also rising and the market continues to favor sellers. However, it’s the right time for you to buy a house, even if you’re not sure if you can afford one.
The good new; you can probably afford a home where you want to live. The bad news; it may be a stressful process. Here are some of the issues you may have encountered or heard of and how you can deal with each.
You Won’t be able to Put 20% Down

A 20% down payment makes the entire home buying process easier. However, it’s a large chunk of change. If you purchase a $200,000 home, you’d need $40,000 down to hit the 20% mark. That’s an entire year’s pay for some people.
The good news is you’re not alone. According to the National Association of Realtors, about 81% of Americans have a down payment lower than 20% when they buy their first home. The bad news; you’ll lose many great benefits of putting 20% down.
However, you can tap into the bank of Mom and Dad for a gift. Just make sure you understand how this will work and the limits posed on receiving a gift from someone towards your down payment.
In addition, you can pull the down payment from your retirement savings accounts. In some cases, this can be done without paying a penalty.
Another thing to consider is skipping the big wedding. If you plan to get married before you buy a home or soon after, don’t drop a huge amount of cash on your wedding. If mom and dad are footing the bill, ask if they would be willing to use 50% of the amount they’ve set aside towards your down payment and 50% for the wedding.
You can also use a first-time home buyer program. There are several federal, state and local programs that provide down payment assistance for first-time buyers.
You Know Your Credit Sucks
Bad credit is one of the hardest obstacles to overcome when buying a home. The best thing you can do is pay off some of those bad debts and start making all your current payment son time. In addition, follow this advice:
- Don’t take on any new debts while house hunting
- Don’t apply for new credit cards during the process
- Know your credit score before you start searching for a home
It’s still possible to get a home mortgage with less than perfect credit. If your score is below 620, you may have trouble getting approved without a huge down payment. However, if you have a score of 620 or higher, you can likely find a way to get approved. Those with a credit score above 720 will have very little issue finding a lender willing to work with them.
You’re Not Sure Where to Start

The home buying process is certainly overwhelming. Whether it’s your first time or your fifth, it’s stressful. This is one of the reasons why real estate agents are so popular.
The best place to start is with your own education. Learn the basics of getting a mortgage and how home buying works. This includes how to find the right local real estate agent and how to choose between a commissioned agent and a flat-fee agent.
It’s also important to know that some homes will offer owner financing. You may be able to buy a home without a mortgage on land contract or by allowing the seller to hold the mortgage. This can work great when you’re not able to get a conventional loan and you want to save on closing costs.
When you hire the right agent, you’ll have a partner throughout the process. They will help you understand what you’re getting and they will also protect you when you do find the right home. If you’re not sure where to start, find a good real estate agent to help you.
You’ve Put in your Offer and Become Riddled with Fear
It’s all new to you and fear may come with the offer you submitted. Remember, your offer is always contingent on finding favorable lending terms and having the property professionally inspected. If you have a great real estate agent, you don’t have much to worry about.
You won’t actually buy the home until there’s a contract you and the seller agree on. There’s no reason to be fearful right now, as any money you have invested will go into escrow. Take a breath and remember, it’s not final yet.
There are several obstacles you face as a first-time home buyer. One of the best things a new buyer can do is find an agent with experience working with first-time buyers. This can go a very long way to helping ease your mind throughout the process.
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