Curve

Buy a house in your 20s with these flexible mortgages

Erik J. Martin
The Mortgage Reports contributor

Younger adults partake in wide menu of mortgage options

Are young adults interested in buying a home?

According to the data, the answer is an undeniable “yes.”

Yet the question is still common among older generations about the up-and-coming group of 18- to 34-year-olds, whom prior generations commonly refer to as Millennials or Gen Y.

One in four adults in their 20s and lower-30s currently own a home, according to a Consumer Reports survey.

Yet, 71 percent of young starters dream of homeownership because they yearn for more privacy, the capacity to personalize a space and the opportunity to build equity and wealth, per the same survey.

Sixty percent prioritize owning a home that is a “reflection of me” according to a new Better Homes and Gardens poll.

The good news for younger buyers is that the path to homeownership can be smoother than many believe. The journey starts with learning about favorable financing options that offer the right combination of flexibility and affordability.

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Buyers in their 20s don’t compromise on amenities, location

Twenty- and thirty-something buyers have different needs, tastes and priorities than other generations. But research demonstrates that, while young adults can be slower to purchase a home, their desire to become homeowners remains as strong as older age groups.

In fact, a fresh Bank of America report reveals that debt obligations aren’t curbing enthusiasm for home buying. The study shows that people in and around their 20s believe many common reasons for taking on debt are well worth it.

Homeownership is one debt-worthy proposition, according to 89 percent of survey respondents.

“Millennials want to purchase homes — they are just waiting for the right one and taking their time to find it. They’re also optimistic about their financial status,” says Kathy Cummings, first-time home buyer expert with Bank of America. “Rising rents across the nation are starting to drive young professionals to think more about buying homes now.”

Cummings says younger buyers are seeking affordable urban living in homes that will suit their lifestyle and within cities offering opportunities for employment, affordable housing and social activities.

Additionally, “many Millennials want to be close to schools, parks, shopping and restaurants, and they seek an open floor plan and updated fixtures,” says Roberto Cabrera, senior vice president for Regions Bank in Birmingham, Ala.

“Many are also waiting longer to buy a home,” says Cabrera, “with some skipping the starter home and perhaps renting for a while, then moving into a larger suburban home, often when they start a family.”

Verify your new rate (Apr 26th, 2019)

Mortgage programs to buy a house in your 20s

Members of the emerging generation often delay purchasing because they think they aren’t eligible for a mortgage loan.

They can feel financially challenged due to student loan and auto loan debt, rent payment increases, and a competitive employment climate.

“Many think they can’t qualify for a mortgage when, in fact, they have never tried,” Nick Stamos, co-founder/CEO of San Francisco-based Sindeo, says.

Stamos continues: “Actually, there are many options for first-time homebuyers when it comes to mortgage programs and downpayment assistance.”

Several low downpayment and flexible loan options exist today, many of which don’t require high credit scores, including the FHA loan that requires just 3.5% down.

Fannie Mae’s HomeReadyTM and Freddie Mac’s Home Possible Advantage® both offer 97% loan-to-value options; and downpayment assistance programs provided by many cities, counties and states.

The USDA mortgage comes with income limits and geographical restrictions, both of which are quite lenient. Buyers who fit into eligibility standards can qualify for a zero-down loan at very low rates.

“An experienced mortgage advisor can help Millennials navigate these programs available to them and determine the loans and rates they can qualify for,” Stamos adds.

Time-proven buying methods for any age group

To qualify for the best mortgage rates and loans to own a home sooner, follow these time-tested suggestions:

  • Check your credit score and take steps to improve it
  • Set aside money for the downpayment and closing costs
  • Create a budget and forecast potential home costs
  • Consider up-and-coming neighborhoods

Also, don’t overlook fixer-uppers. “Many Millennials prefer ‘move-in-ready’ homes, but sometimes homes that need a little love will pay off in the long run for a great return on your investment,” says Liz Murphy, Realtor with Berkshire Hathaway HomeServices in Jenkintown, Pa.

In today’s mortgage market, few barriers stand in the way of a motivated, young buyer to achieve affordable homeownership.

What are today’s mortgage rates?

Whatever generation with which you consider yourself associated, you may be eligible to capitalize on continued low mortgage rates that can get you into your dream home quicker. The first step is to obtain an accurate, up-to-the-minute rate quote from an experienced mortgage lender.

Check today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Verify your new rate (Apr 26th, 2019)