No matter how beneficial purchasing a home may be for your long-term financial security, the cost of buying your first house can often seem exorbitant and unattainable. This leads many younger individuals to delay purchasing a home until later in life than they would have if the costs were more manageable.
Despite the common misconception that young people are unable to purchase homes, nearly 40% of individuals under the age of 35 are homeowners. This demonstrates that it is far from impossible or unaffordable for younger generations to become homeowners.
Homeownership Stats by Age
No matter how beneficial purchasing a home may be for your long-term financial security, the cost of buying your first house can often seem exorbitant and unattainable. This leads many younger individuals to delay purchasing a home until later in life than they would have if the costs were more manageable.
Despite the common misconception that homeownership is out of reach for younger generations, there are plenty of young people who are buying homes. In fact, nearly 40% of people under 35 own a home, proving that it is far from impossible or unaffordable.
As evidenced by the graph above, the homeownership rate for individuals aged 35-44 is just over 60%, which is comparable to the national homeownership rate across all age groups.
Interestingly, if you take a look at the chart below, the homeownership rate has remained relatively consistent between 62 and 68 percent since 1965. This indicates that the ideal age to purchase a home is around 35 years old.
Buying a home before the age of 35 can provide you with invaluable years of accumulating equity, wealth, and long-term financial security, while your peers are still renting or living with their parents. This is an opportunity to get a head start on your financial future.
Here’s How the Government Is Making It More Affordable to Do So…
Buying your first home just got a little more attainable thanks to the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA). In a recent move, FHA borrowers will now benefit from reduced mortgage insurance premiums, making the dream of homeownership more accessible.
FHA loans are a popular choice among many first-time homebuyers due to their government-backed insurance and more lenient requirements, which can be beneficial for those with lower credit scores or smaller down payments. However, when opting for a lower down payment, borrowers must pay for mortgage insurance, the premiums of which the FHA has recently reduced by an average of $800 per year.
Saving a substantial amount of money on a yearly basis is certainly nothing to scoff at. However, it may seem like a mere drop in the bucket when it comes to making the purchase of a home more affordable.
If you're looking to join the ranks of the nearly 40% of younger homeowners, there are a few ways to make buying your first home more affordable. Here are some tips to help you save money and make your dream of homeownership a reality:
- You don't need to purchase a large house. Chances are, you'll end up selling your initial home and purchasing another (or two) over the course of your lifetime. Therefore, don't feel the need to buy a house that will accommodate your future needs. Focus on buying a home that meets your current and near-term needs. Additionally, don't get caught up in trying to impress your friends and family with the size of your house, as owning one at a younger age is impressive enough.
- Furnishing within a budget is a great reason to opt for a smaller house. The larger the house, the more rooms it has and the more furniture you must purchase. However, even when buying a smaller house and needing less furniture, it is still important to furnish it within a budget. Seek out good deals and discounts, rather than relying on a credit card to purchase furniture that may not last as long as the debt incurred.
- If you have your heart set on a certain town, city, or neighborhood, but it's out of your price range, it's best to purchase a home in an area you can afford now rather than waiting to save up for the more expensive option. Time, inflation, and rising home prices can quickly outpace your ability to save for a larger downpayment. Instead, buy in a more affordable area now and let the economic factors work in your favor, helping you to build wealth and equity so you can eventually trade up to the home of your dreams in the area you desire.
- Try to beat what you would pay in rent. This is a double-edged sword: you pay less per month than you would in rent, and you can build equity and wealth at the same time! It may not always be possible, but sometimes you can actually purchase a home for less than you currently pay in rent. However, the key word here is "try." You may need to search more diligently, or perhaps be less selective in order to make it happen, but it can be worth the effort and sacrifice! Doing this can put you far ahead of where you would have been financially in a much shorter period of time.
- Owning a home comes with the need to fix, replace, or update things from time to time. While some tasks may require the help of a professional, taking the time to learn how to do basic repairs and updates yourself can save you a lot of money. Thanks to the internet, it's now easier than ever to find helpful tutorials and how-to videos on almost any project. In fact, a woman and her children recently built an entire house just by watching them!
Combining a few of those tips—along with the lower mortgage insurance premiums—will go a long way in making it more affordable to buy your first home now, rather than years from now.
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