Three Important First Steps for First-Time Home Buyers
As a young adult and first-time home buyer, you may think it is not easy to enter the housing market. However, there are several concrete actions you can take to help yourself get your foot into the door of home ownership, and they can be broken down into three key sections:
- Down Payment
- Family Help/Dual Income
- Compromise
Following the recommendations below will accelerate your path toward homeownership and hopefully make the journey as smooth and exciting as possible.
Let’s discuss how first-time buyers can save for a down payment, how their family and/or partner can provide support and how a little compromise can go a long way! Also see:
- How to Find the Right Realtor for Your Home Transaction
- 10 Common Mistakes Made by First-Time Home Buyers
Step 1 – Saving for a Down Payment
Saving for a down payment is the first step a young adult must take to enter the housing market. But, is this the same for today’s buyers as in the past? Unfortunately, no, it’s not. The most significant difference between someone saving for their first down payment today compared to 40+ years ago can be broken down into two key differences:
- How much of a down payment do they need
- How much time it takes to save that amount
Due to increased house benchmark prices, down payments have also increased. This means that young people looking to become homeowners must save up a larger amount of money than in the past. Furthermore, wages that are not growing nearly as much as inflation means it typically takes much longer for a young person to save up for the minimum 5 per cent down payment required to buy your first home in Canada.
However, even with these challenges, you can still pursue your first-time home purchase by getting creative. Some of the ways that younger generations have been able to save up for a down payment:
- Living at home with your parents for a longer period
- Getting a roommate to share your living expenses
- Tapping into any government housing programs
- Working a second job or starting a side hustle
- Stop eating out as much as possible
Many first-time buyers in Calgary are also fortunate to have help from a parent, partner or another family member in this day and age.
Step 2 – Ask Loved Ones for Help
Not all first-time homebuyers can purchase a home with a single income or without help. Of course, there are instances where those fortunate enough can do so, but it is not a reality for most potential buyers.
To afford a home, some young buyers turn to their parents or significant other to help. This is quite common in this day-and-age, so don’t be ashamed if this is you.
Here are some ways that first-time home buyers receive help financially:
- Gifted a down payment
- Co-sign a mortgage
- Moving costs
- Legal fees, inspections, condo document reviews
- Inheritance
Not every family member is in a position to help financially. Some other ways that they help first-time home buyers are:
- Dedicating their time
- Dedicating their energy
- Providing their expertise/advice/guidance
- Helping you find a property
- Helping you move
While getting help from parents is undoubtedly convenient, it usually isn’t enough to cover everything. In addition, most first-time buyers need financial support from a partner for their home ownership goals to come to fruition. Also see:
Step 3 – Willing to Compromise
Five main factors typically influence a person’s decision to purchase a home:
- Price
- Location
- Size
- Condition/Finishes
- Amenities of building and/or community
In a perfect world, you could find a home that fits all five criteria. However, today’s first-time home buyers will likely have to compromise on one factor or another to get their foot into the door.
An example of compromises you may have to make to afford your first home:
- Looking at more affordable multi-family properties instead of single-family
- Considering older, fixer-upper homes versus newer homes
- Picking a new community or city to live in versus downtown or inner city
Questions about Your First-Time Home Purchase?
Saving for a down payment, getting help from family and being able to compromise are three critical steps most first-time homebuyers must take in today’s residential market. And while these aren’t the only factors in helping first-time buyers step into homeownership, they certainly are three of the most important.
If homeownership is one of your goals, you can do it! You just might have to be more creative, patient, and flexible to accomplish that goal. If you’re considering buying your first home in Calgary, reach out to our team anytime or give us a call at 403.519.0495 we will be more than happy to help!
We are looking forward to discussing your first-time home-buying goals with you!