It’s a never ending cycle. You have to pay rent, so you can’t save much for a house. You can’t stop paying rent because you can’t afford a house.
You have several options to help you break the cycle and budget for a home.
- Get a roommate. Splitting your rent and other monthly bills will let you save more money each month.
- If you already have a roommate, spouse, or significant other, considering relocating to a building with lower rent or downsizing to a smaller unit.
- How close are your parents? The idea might not seem appealing, but a few months of rent-free housing could allow you to save enough for a down payment.
- Make a lower down payment and finance more of the home’s purchase price.
Some lenders (Centra included) will let you finance 97% of a home’s purchase price. For a $100,000 home, you would only need $3,000 (plus closing costs) to get in your home.
The downside: Your monthly mortgage payment will be higher, or you will have to take longer to pay off your mortgage. You would also be required to pay for private mortgage insurance. This is a monthly premium that will be added onto your mortgage payment to provide security to the lender.
The upside: Your monthly housing costs will actually be applied to owning your property, rather than paying for permission to live in someone else’s property.
Before you buy, research all the costs associated with becoming a homeowner such as property taxes, homeowners insurance, and home maintenance. Check out our Mortgage Center for more information.