How I bought my first home at 23
- Apr 17, 2023
- 5 min read
Updated: Oct 16, 2023
Purchasing your first home can be overwhelming. Here, I will discuss how I was able to achieve this at 23, by myself.
Standing on my dirt lot where my home would be built (January, 2019)
Owning a home is a huge investment! It is an incredibly satisfying feeling to have freedom to design a home without restrictions and without answering to a landlord. Owning a home is an investment and in this post, I will talk through how I took a risk and how it has paid off, 4 years later. It is worth giving some background into how I bought my home then my top tips for how to get to this point. Stick around to learn more!
I purchased my first home in 2019, it was a new build so I purchased the dirt lot and the builder built the home from the ground up. It was wonderful seeing my home go from nothing to a 1,300 square foot singe story home in approximately six months. There were only a handful of lots available when I went into the builder model home. I decided to go with the biggest lot left which was offered a significantly bigger back yard. I purchased the home with a conventional loan and paid PMI until I refinanced the rate a couple of years into owning the home.
After three years, we sold the home to Open Door. Essentially, they bought the home, as it was, paid us the funds directly and took care of listing the home/ selling it afterwards. With that money, we used it towards the new home for downpayment and home projects since it was a brand new home.
Flash forward to 2023, my husband and I sold the home and used part of the equity to pay 20% down, to avoid paying PMI. We now live in a two story, 3,013 square foot home, significantly bigger and are beyond grateful/ blessed for where we are.
Tip #1 - Build good credit
Arguably the most important tip is to build good credit as soon as possible. Lenders need to see credit history before lending a large amount of money towards helping you finance a home. Building good credit requires making payments on time and being a good borrower.
I was able to do this with my dad's help. At 18, my dad taught me the importance of building credit. He helped me set up a debit card and when I purchased my first car (with my dad as a co-signer, since he already had credit established) he had me make payments towards the car. This allowed my credit grow at a young age.
Tip #2 - Save your money
Conventional loans require at least a 3% down payment (Mortgage Reports, 2023).
For more information on conventional loan requirements, check this out:
This may not be an easy feat especially for a young college student. Even if you go with an FHA loan, having money saved for a home purchase is a good idea. Expenses will come up as part of homeownership and it is best to be prepared.
I have always been decent at saving money, again based on my dad's guidance. For this reason, I was able to save money most of my college years to allow my savings account to grow and be ready to make a down payment. it took serious discipline not to spend my pay checks but it eventually paid off.
Design center, carpet, tile, countertop and cabinet selections (January, 2019)
Tip #3 - Have steady income and little, to no debt
Depending on the loan you qualify for, creditors need to see steady income. Also, having little debt helps qualify for better loan terms.
I was working full-time since graduating college, so I had a steady job and decent income. I had already paid off my car by that point, so I had no debt. With this, I was able to qualify for a conventional loan.
"You need to have a higher credit score, lower debt-to-income ratio (DTI) and usually a slightly higher down payment to qualify." (Rocket Mortgage, 2023)
Learn more about conventional versus FHA loans.
Tip #4 - Speak to a financial advisor
Financial advisors can help you evaluate your circumstances and help you identify the best options.
I did not personally consult with one, but I wish I had, to help me better understand what I was getting myself into. I only regret not asking more questions to the lenders to help me for educational purposes.
Foundation of home (March, 2019)
Tip #5 - Do your research, consider a realtor
Once you know what you can qualify for, narrowing down your home style is the fun part. Do you like to build your own home? Do you want to buy a cheap home and re-model it completely? Once you have a price range you can afford, you need to narrow down location and home type.
Since my first home was a new build, I worked with the home builder directly and their lender. However, for our next home, my husband and I hired a realtor and she helped us every step of the way getting into our new home.
Tip #6 - Be confident and ready to face challenges
Homeownership is exciting, overwhelming, terrifying but it is worth it! Don't worry about fully furnishing the home. Focus on the home purchase and the rest will come later.
Owning a home has taught me so many valuable lessons. I am more confident in myself, knowing what I can achieve. It has taught me to be smart with my financial decisions and being confident with logical decision making. I have learned to appreciate and protect my space, which is my home. It was fun getting to add my personal touch with furniture, decor, being a first time homeowner, this was so much fun. However, I made sure to not splurge on furniture since a mortgage and bills are already a huge expense.
Home fully built (June, 2019)
Closing thoughts
There are many important milestones in your life. Whether it is getting married, purchasing a car, having a baby and owning your first home. Depending on the market, it is important to consider rates and home prices. However, being prepared and being financially stable for when an opportunity comes, is the best starting point for achieving homeownership. Be proactive and consider what you can do today to help you own a home. I hope this helps you in some way and you learned something as a take-away.
Leave a comment below, what steps are you taking today to help you achieve your homeownership goals? Are you a homeowner now? What tips do you have for new homeowners? I would love to hear more!
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