The Millennial’s Guide to Buying your First Home

I don’t think it is any secret that Millennials are the generation that wish people told them more. I am at the very beginning of the millennial generation, and know that we have a reputation for not doing things because we don’t know how.

Well, when it comes to home buying, I feel that I have a huge number of friends who are now in their late twenties to early thirties who never purchased a home, partially mostly because they think they can’t. They don’t know how to. It sounds like to much money. They don’t know where to start. They can’t afford it. Those are reasons I have heard from many people my age, as to why they would never purchase their own home.

This past spring I purchased my first home, and may things in the process were to my surprise. I, like many people who have never bought a home thought it meant spending more a month. In reality, our mortgage payment is the same as what we were paying in rent. Also, I was under the impression that you needed tens of thousands of dollars (I’m in the Seattle market so realistically hundreds of thousands of dollars here), and was so surprised to find loans requiring as little as 3% down.

In-all, the process was easier and also a better decision than I would have imagined, so I thought I would outline the best tips I have to offer from the experience to help others turn into home-buyers too!

  1. Step 1 – Save. Budget what an affordable monthly payment is, then from that determination decide your maximum budget. There are payment calculators online that can help you do so easily. Once your max budget is determined, this will help you figure out how much you need to put down! A traditional loan typically requires 20% down, but special FHA loans can require as little as 3% for a down payment. Most properties that are not condominiums qualify for FHA loans. A good real estate agent can help you search specifically for FHA approved properties, or keep you on track with properties in your budget. You will need a little more than your down payment saved, to cover costs such as home inspections and moving.
  2. This leads me to Step 2 – Find a Good Real Estate Agent. The best way to do this? A referral from a friend. Reach out to your social network and ask your friends “Who has a GOOD real estate agent they can recommend me?”. Real Estate agents are a dime a dozen, but good ones are much harder to find. If a friend recommends an agent, ask them why. Were they helpful and knowledgeable? Did they know the market well? Give you good advice? Respond quickly and gave good customer service? A good real estate agent will be able to give you SO MUCH MORE advice than I am attempting to dish out here.
  3. Step 3 – Get Pre-Approved for a loan. If you are part of a credit union or former military, there are awesome options for you right there. VA loans and credit union loans are known for dishing out incredible rates and are much easier to get approved for. If those aren’t viable resources for you, this is another reason I suggested the “good” real estate agent. Many agents have preferred lenders they work with, and you can shop their rates against referrals from friends. This pre-approval will help you be in position to pounce on the perfect property when you find it. The current real estate market is fast and vicious, and having a lender ready to write you a letter on the spot will make your chances of actually landing your dream place skyrocket.
  4. Step 4 – Start shopping! I think the best advice my real estate agent gave me was “don’t make an offer unless you LOVE it”. This is a big investment and something you are permanently locking yourself into. Make yourself a list of non-negotiables and STICK TO IT! For us we wanted a commute under an hour, vaulted ceilings, a two-car garage, and no less than three bedrooms. At the time we were looking we almost compromised many times. Looking back on it, if we did we would have put ourselves in a bad situation! We almost made offers on places with 1 less bedroom or further outside our desired radius than we had hoped. Looking back, if we had done so we would have been so unhappy! Wait until you find something that meets all your non-negotiables (I am not saying it will be your absolute dream home, but make sure it hits the big marks).
  5. Step 5 – Make an offer and CLOSE! Also why you need a good real estate agent – they can coach you on what kind of offer to make, how many offers have already been submitted, and if your offer is reasonable. Our real estate agent had suggested an escalation clause, since those are all the rage in Seattle right now. She also suggested we write a letter to go with our offer to appeal to the buyers emotionally. You know what? IT WORKED! A good agent will also be able to educate you if you are offering too much, or not being aggressive enough. ALSO – if you don’t have much money saved, guess what? You can request for the seller to pay closing fees! This doesn’t work all the time, but it is acceptable and keeps a lot more cash in your pocket!

The other biggest advice I have to offer would be to keep reasonable with your budget. This is your first home! Are you unsure about your career? Are you a couple living off of two incomes but potentially will go down to one if you stay home with kids in the future? Make sure that your budget is sustainable so that no matter what happens you are able to continue making your monthly payment comfortably.

Here are some resources I recommend checking out:

Info on FHA Loans

VA Home Loans

Payment Calculator

Redfin (My favorite place to search for homes)


11 Replies to “The Millennial’s Guide to Buying your First Home”

  1. This is great advice. You certainly need to hit off all of these checkpoints and it surprises me how often people buy too much house and then are house poor and unable to spend on other experiences of life.

    1. Yes I think that is a big one. The thought of being ‘house poor’ is actually terrifying to me… I have seen friends get in over their heads on scary levels! When we purchased we grabbed a town home that for sure isn’t our dream house, but it has enough room to support our family as it grows. I am sure someday we will have the opportunity to get into something larger, but for now, this is just perfect and our budget has plenty of room for us to travel and do the things we enjoy 🙂

  2. LOVE this post! I wish we all had more opportunities to read things like this that actually do tell us how to make our wishes come true. Making such a huge investment can be very scary, but if we learn to do it right, it’ll all work out. I would love to see more posts like this helping us young people out a little more! 💖

  3. This is some great information for new home buyers! I believe many people are afraid to get into a home because they don’t realize the equity that you are gaining as opposed to throwing away on rent. I know many people who have these same thoughts but we must think of the long term goals!! This is a great post!!

    1. Thank you! I agree that people forget to think of the equity, and also they just feel that it should be more expensive to buy than rent when it really isn’t. You don’t have to over-extend yourself to own a home and there are many programs out there to help first time buyers!

  4. Great Post! A lot of millennials (in the United States Anyway)
    Are opting for Tiny Homes which cost from $40,000-$60,000
    & can be paid off in a few years, since we are about to hit
    another housing bubble & prices will crash again. As we saw
    with our parents generation in which home ownership became
    a burden, & so many people are house poor it is rather scary.
    Being upside down in a luxury house isn’t really living the good
    life. For Millennials less is more.

      1. Small children don’t take up a lot of space, & from what
        I have experienced, they LOVE having their own small
        spaces, it is like living in a tree house. When they reach
        their pre-teens it can be time to move on up, but in those
        10 years you have already paid off the tiny house, & can
        be looking for something more appropriate.

        We know people who have TVs in every room & do not
        even eat family meals together = total disconnect. A tiny
        home promotes a closer knit family & spending quality time.

  5. Wow, thank you so much for writing about this! I’ve actually been thinking about reading up on how to purchase a house and these tips are super helpful for it 🙂

    1. That’s awesome that you found it helpful! Our purchase left us wishing we had done so YEARS ago because it was all much easier and attainable than we thought it would be. I hope you are able to put this into use soon! 🙂

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