Jumping into homeownership is no small feat. It only makes sense that many people want to ease their way in by purchasing a starter home. If you think you may be one of them, you've come to the right place. I've laid out four signs that a starter home is the right choice for you. Read them over to see if you're ready.
It's what you can afford
This is the big one. Starter homes are often smaller than average and come with smaller price tags to match. If you're working with a tighter budget, you may want to consider limiting your search to starter homes that will allow you to feel more comfortable when making your mortgage payment each month.
The first step to this is finding out how much you can afford to spend. Start by using a mortgage calculator to get a sense of what your mortgage payment will look like at a variety of sale prices. Then, once you've found a number that feels comfortable for you, verify that it works by adding it into your monthly budget in place of your current rent payment. See how that payment feels when added in with the rest of your expenses and, if needed, make adjustments to your price point.
Next, it's time to see what you can get for your money. Many real estate websites offer tools that allow you to view available listings in your area. Use one and filter the listings by the sale price that you determined earlier. It should serve as your maximum. Finally, look at the listings that are available to you. This should give you a sense of the types of homes that you can afford. If you see mainly starter homes, that's a good indicator that you're in the right place.
You're newer to home maintenance
If there's one big change that people have to contend with when they go from renting to buying, it's dealing with home maintenance. Once you sign on the dotted line, the upkeep of your home is your responsibility. There's no more calling the landlord whenever something breaks, a fact which can feel daunting to many people. If you're one of them, there's no shame in it, but a starter home may be a better fit for you.
Starter homes are essentially like training wheels for home ownership. Since they're smaller, there's less of everything to contend with, maintenance and upkeep included. They can serve as a way for you to get used to the ins and outs of home ownership without having to worry about juggling all the upkeep that a larger "forever home" might entail.
You've settled down (for now)
Conventional wisdom states that, when you buy a home, you should plan to live in it for at least the next five years in order for the investment to make sense. (Otherwise, you're better off continuing to rent.) With that in mind, good candidates for starter homes are relatively settled in their lives. This means you should like the area where you're living, you should plan to continue working at your place of employment for the foreseeable future, and there shouldn't be many immediate lifestyle changes around the corner.
However, while you should stay living in your starter home for a little while, it doesn't have to be forever. Starter homes are meant to be a stepping-stone to bigger and better things. If you have your sights set on big lifestyle changes happening later on down the road, like getting married or starting a family, that's absolutely fine.
You have the next step in mind
Building off the idea that you'll only live in your starter home for a few years, it's important to consider what your next step will be before you buy. Do you intend to sell your home and put the funds toward buying something bigger? Or, do you intend to keep it on-hand to use it as a rental property?
If you can see yourself doing one of those two things, a starter home is probably the right choice for you. If, however, you can envision yourself staying put for the long haul, you may want to look into a home that's more permanent.