As a real estate agent, the question of whether anyone should buy a house is usually met with an emphatic “yes!” But twenty-somethings are in a unique place in terms of their careers and families—not to mention student loan debts. That might be why so few people buy houses in their 20s. But not only can it be done, but those folks will be way ahead of their peers in the decades to come.
Down Payment
The first big hurdle young buyers face is the down payment. Unless they’re getting help from family, chances are good that most people in their 20s don’t have the recommended 20 percent of the home price to put down.
However, there are down payment assistance programs available that your clients have never heard of. Depending on income, employment, and other criteria, they might just apply for a little boost from one of these programs.
Shaky Credit
It makes sense that young homebuyers won’t have the same credit histories as older, more established buyers. Having little credit history is almost as bad as bad credit…but there are steps your clients can take to address the problem.
First, they should get a free copy of their credit report and see if any mistakes pop up. They can work to raise the score—most mortgage lenders want a minimum of 660. Finally, your clients should understand that the amount of available credit is also important. It’s a good idea to use less than 30 percent of your credit at any given time.
Student Loans
Most people in their 20s have a major student loan burden. The average borrower carries just under $30,000, and those who pursued additional degrees after graduation will have much more. For some potential homebuyers, their debt-to-income ratio will disqualify them from most mortgage lenders.
How to get around it? Borrowers may be able to refinance their loans, which may give them some wiggle room when it comes to mortgage qualification. Also, many states offer programs that can help college graduates buy their first homes. Check to see if your market has those programs available, and let your clients know!
Starter Home Vs. Forever Home
People who buy houses in their 20s should understand that a “starter” home is called that for a reason. Your first home isn’t necessarily your last. In fact, most people go on to sell their first homes as families expand or jobs relocate.
That means the house doesn’t need to be perfect. Even if the property doesn’t check all their boxes, if the price and location is right, then they can live without a garden tub or quartz countertops for a few years. Savvy young buyers will look for a home that’s at or below the midpoint of their budget and keep growing their savings as they enjoy their starter home.
