When you’re saving up for your first home, it’s easy to find yourself wishing for a little extra help. You might think it feels like everyone else has some assistance from their family. But if you’re not starting off with a financial boost, what’s the best way to start your journey?
Here’s the silver lining: owning a home isn’t exclusive to those who get a financial leg-up. In reality, most first-time buyers don’t rely on windfalls. According to the National Association of Realtors, only about one in four people purchasing their first home used a gift or a loan from relatives or friends for their down payment.
If you’re not receiving any gift funds for buying a house, you certainly aren’t alone. Here’s a roadmap to help you achieve homeownership.
Overcoming the Mental Hurdles
The current housing market can feel daunting, with high prices and climbing mortgage rates feeling particularly unfair. It’s easy to get caught up in social media’s parade of successes, which can stir feelings of guilt or inadequacy, notes Rahkim Sabree, a financial therapist and accredited financial counselor.
“We frequently get swept away by the possibilities shown online and start comparing our journey to others," he explains.
The key to steering clear of this mindset is focusing on your own values and goals. Remember, social media is just someone else’s highlight reel.
“We don’t know everything behind their story — like what support they received, the kind of debt they’ve incurred, or what their long-term commitments look like,” Sabree points out.
It may sound basic, but maintaining a positive outlook is incredibly powerful. Once your mindset is in check, use an online calculator to find out how much house you can realistically afford. This will help transform your planning into actionable steps.
Building Your Support Network
You won’t necessarily need a hefty gift from your parents, but having a strong team of homebuying professionals around you is crucial.
Feeling overwhelmed? Consider starting with a housing counselor certified by the U.S. Department of Housing and Urban Development (HUD). They’re especially helpful for buyers facing credit issues or past bankruptcies and are available at little to no cost.
Next, find an experienced buyer’s agent familiar with your local market. A knowledgeable agent can quickly spot opportunities and work to ensure your offer is accepted.
Don’t forget about getting pre-approved with various lenders to secure the best interest rates. Alternatively, a mortgage broker can shop around for you, often accessing better rates than you might find independently, though they charge a fee.
Enhancing Your Financial Plan
There are grants and financial aids available for first-time buyers that are often overlooked. If you skip exploring down payment and closing cost aid programs, you might miss out on a substantial amount of money.
Start your search with state housing agencies, local governments, and nonprofits. Additional sources include your workplace, union, or mortgage lender. Most funds are reserved for first-time buyers with incomes below the median, but some programs cater to repeat buyers or those with higher incomes.
Arica Rucker, from Century 21 Rucker Real Estate in Charlotte, NC, notes that many buyers, initially unaware of these opportunities, are thrilled to learn about available financial assistance.
“They often don’t believe it at first,” she says. “Then reality hits when they realize they need savings for out-of-pocket expenses.”
Realize that even with down payment help, you’ll need cash ready for upfront costs like deposits, inspections, or moving expenses.
Thinking Outside the Box
Consider less conventional options like short sales or foreclosures to potentially meet your budget. If you’re up for the task, you might think about “house hacking” with an investment property, such as living in one part of a duplex while renting the other. These transactions can be complex, but a seasoned agent and loan officer can guide you through.
Certain creative financing options carry risks. Rely on your homebuying team to weigh the pros and cons of accessing any retirement funds, such as a 401(k).
“Ideally, you’d avoid touching that money,” Sabree remarks. “Yet, if there’s no gift money and creativity is needed for the purchase, it’s a viable option.”
Remaining Steady
Focus on your circumstances instead of others’. Gifts can help, but they’re not always a straightforward path. Inheritance might come with emotional challenges, while gifts from relatives could entangle obligations.
Instead, concentrate on what you can manage, becoming resourceful as you work towards saving.
“Develop a plan, jot it down, and keep it precise,” suggests Rucker.
Sabree, an expert in overcoming financial trauma, mentions that feeling overpowered by the process is normal. Without the right mindset, you might even question the rationale behind wanting a house at all.
In moments of heightened emotions, grant yourself kindness and continue aiming for your goals.
“Keep yourself anchored in the present,” he advises. “Literally feel the ground beneath your feet.”
So, don’t dwell on the gift you didn’t receive. Far from being too late, you’re just embarking on this exciting new chapter.
