Yes, you can!
Buying a home might seem to be popular among married couples, young families and older generation, but that doesn’t mean people in their 20’s don’t have the capacity to buy a house. Here are some ways to make it possible for millennials to buy a home.
1. Ask for help. There’s no harm in reaching out to your parents and relatives to ask for help in buying your first home. Remember that aside from the down payment, you also have to consider other expenses like closing costs, realtor fee, etc. Considering all that, buying a house requires a lot of money. According to a survey by the National Association of Realtors (NAR), 97% of millennial buyers relied mostly on their own savings or a gift from their parents to cover the down payment. Each parent can give a maximum of $14,000 gift to an individual.
2. Consider an FHA loan. FHA loans have lower mortgage rates which is ideal for people who cannot afford to pay high interest rates. Aside from this, FHA loans allow a co-signer’s income to be considered when looking at the total income of the buyer. This is helpful especially for millennials whose salary are not enough to qualify on their own.
3. Low down payment. The typical down payment is 20% but now lenders are more lenient and down payments can go as low as 3%. However, these loans are considered high risk so you have to pay mortgage insurance. Another good option is the VA loan, if you qualify. VA loans do not require a down payment.
4. Purchase a starter home or condo. Start with a small house so it’s easier for you to make payments on the loan. Choose a starter home in a nice neighborhood. You can always upgrade or renovate the house later if you have the money. So before you head out home shopping, look at the neighborhood first.
5. There are lenders who may discriminate by age because they think that young people don’t have the financial stability and capacity to take on a mortgage. You can prove them wrong by presenting your credit history and the necessary documents that show your capability to buy a house. If the lender still refuses, find another one. You can always find a lender who is just and fair.