What are they and is one right for you?


If you are a first-time home buyer, the choice is yours. You can buy a larger property or opt for a starting house instead. Here, we’ll discuss the pros and cons of a starter home and help you decide if it’s the right choice for you.

What is a starting house?

A starter home is generally defined as a smaller property in which a buyer only intends to live for a few years. There is no fixed number of bedrooms or square footage. A starting house can have one bedroom or two or three. It can be 800 square feet or 1500 square feet. But generally, you’ll know you’re buying a home to start with when you can imagine yourself overtaking it on time.

Starter homes also tend to be less updated than forever homes, although that’s not always the case – you can find a starter home with lots of upgrades.

First-time home buyers and departure homes

A starting house is usually smaller than a forever house. As such, it’s a good choice for a first-time home buyer. A starter house makes the transition to home ownership easier. If you’re new to making a mortgage payment, paying property taxes, or maintaining a property, you might be better off buying a smaller home than a larger home.

Buying a Starter Home Pros and Cons

There are some benefits to buying starter homes that you should be aware of:

  • A lower purchase price: You’ll typically spend less on a starter home than on a permanent home, which translates to a lower mortgage payment.
  • Reduced property taxes: The less your home is worth, the less property tax you will be charged.
  • Less maintenance: If you’ve always been a renter and have no idea what it means to have to maintain a home, a starting home can be less of a burden on you. And it is likely to take less time.
  • Easy resale: Starter homes tend to be in high demand because they are more affordable than forever homes. So, if you decide to move after a few years or if you have to move because your circumstances change, it might be quite easy for you to find a buyer.

On the other hand, buying a starter home has its drawbacks:

  • Less room to grow: If you expand your family after buying a home starting out, you might find that you instantly run out of space.
  • More work to do: Depending on your local housing market, you may find that the typical starter home is not in as good condition as the average home forever, which could mean more work for you and costly repairs.
  • This might not be the house of your dreams: Your image of the perfect home may not be a small condo or a townhouse, or a freestanding home with limited space. And dealing with that disappointment can be difficult, even if you recognize that starting a home is a smarter financial decision.

Tips for buying a starter home

If you’re new to home buying, check out this first-time home buyer’s guide. It’s packed with general information on homeownership, such as how to find a home and how to apply for a mortgage.

In the meantime, here are some tips for finding a starting home:

  1. Calculate your budget: You can use a mortgage calculator to see how much of a home loan you can afford based on your down payment.
  2. Get pre-approved for a mortgage: This will help you know how much of a home loan you will need to work with, and you can check out this list of mortgage lenders for first-time homebuyers to find a lender for pre-approval.
  3. Find the right real estate agent: Ask your friends for recommendations on an agent who is familiar with the area and who can help you find a first-time home within your budget.
  4. Write a list of your must-haves: These are things you refuse to compromise on in your starting home, like a minimum number of bathrooms.
  5. Be flexible: Your starting home is unlikely to be the home you live in forever. So if you can find a property that is right for you in the short term, it might be worth moving forward even if it lacks some features that you would like or needs some cosmetic work.
  6. Don’t pay too much: Part of the value of buying a home starting out is spending less money, so don’t stretch your budget for a home you don’t plan to stay in for the long term.

The Basics of Buying a Starter Home

Buying a starter home can seem like a compromise, and to a large extent it is. But remember, while you might not want to stay in your home forever, it could be a wise investment. If that home goes up in value between when you buy it and sell it, you could end up with a nice profit, and that’s money you can use as a down payment towards a larger home.

Plus, while some people end up living in a home initially for just a few years, other buyers end up staying there for decades. You could thought you will outgrow your starting house, but you never know when that house might end up serving your needs for many years to come.

If you are thinking of buying a home from the start, be sure to shop around with different mortgage lenders to find a good deal on a home loan for that property. Each lender sets their own interest rate and closing costs, so put the offers together so you can compare your choices.

You’ll also want to make sure you’re a good mortgage candidate. This usually means having a good credit rating (620 is the minimum for a conventional loan), low level of existing debt and a stable job. You can check out this beginner’s guide to home loans to learn more about what it takes to qualify for a mortgage and how to find a good deal on one.

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