Think You Can’t Afford to Buy a House? 10 Ways to Put a Home Within Reach.

Affordability is the main concern of most consumers looking to buy a house, particularly for millennials and Generation Z.

If you’re hoping to buy a house in the near term, it likely has you feeling a bit discouraged. Will you ever be able to afford a house? Will you be stuck renting forever?

Fortunately, there are several creative ways to ease that burden and get your foot in the door of homeownership — regardless of your earnings or income. Here are our top 10 ideas.

Are you worried you can’t afford to buy a house? Here are ten ways to do so — even with today’s prices:

1. Consider a townhome or condo

As of the third quarter of 2024, the average U.S. house price is $420,400, according to the Federal Reserve Bank of St. Louis. This figure reflects an increase of $5,900 compared with the preceding quarter and is $15,000 lower than the previous year. House prices grew quickly from mid-2021 through late 2022, but the market has started to cool off. The median home sales price in the U.S. declined in three out of four quarters in 2023.

Meanwhile the average sales price for a condominium in the U.S. in 2023 was $343,800, with higher prices in specific regions such as New York City. That’s a potential difference of $76,600.

Not only does that lower price mean a smaller down payment, but it also means a lower monthly payment. Condos also come with lower property taxes and insurance costs in most cases, too. 

2. Prioritize healthy credit

A good credit score means a low mortgage rate, which can make affording a home much, much easier.

Typically, the best credit scores are reserved for borrowers with a 740 score or better. If your score’s not quite at that level, take some time to pay down your debts, settle any late or overdue payments, and pay your bills on time, every time.

3. Take on a side gig

If you’re short on cash to buy a home, taking on a side hustle can help you raise the funds you need. This might mean driving for Uber or Lyft, working for apps like Favor or Instacart, or doing some babysitting or house-sitting when you have time. You could also start an Etsy shop or find some other way to use your talents for extra earnings. 

Just make sure you funnel all your additional cash into a savings account. Then, once you’re ready to buy a house, you can use it toward your down payment, closing costs, and other expenses.

4. Use a no-down mortgage loan

You don’t need a huge down payment to buy a loan. In fact, some mortgage programs allow you to make no down payment at all, making it significantly easier to afford a home — even with little savings.

VA loans are one such example. These are loans for veterans, military members, and their spouses. They require zero down payment and zero mortgage insurance. 

If you’re not in the military, a USDA loan can be an option. These also require zero down, but can only be used in certain rural and suburban parts of the country. Use this map to see what areas are eligible in your community. 

5. Use a down payment assistance program (DPA)

If you don’t qualify for a no-down loan, there are also down payment and closing cost assistance programs that can help. These can cover part or even all of your upfront costs, and in some cases, may not need to be repaid.

Check with your local housing authority or state housing agency for details on what’s available in your area. Your real estate agent may be able to help as well.

6. See if you qualify for other assistance

There are other government programs that can help, depending on your career and income level. Teachers, EMS workers, firefighters, and police officers, for example, can use the Good Neighbor Next Door Program, which offers discounted homes to public servants. 

Check with your real estate agent or local housing department to learn about other programs that vary state by state.

7. Consider a distressed property

You can also look into distressed properties — foreclosures, short sales, or properties forfeited to the Department of Housing and Urban Development, the IRS, the FDIC, and other government agencies. Individual banks have some properties for sale, too. These often come at a discount and aren’t available on the open market.

8. Consider a different location

Exploring real estate options in different neighborhoods or areas with lower housing costs can significantly impact the affordability of homeownership. Home prices can vary widely from one neighborhood to another, so expanding your search to areas that are in the early stages of gentrification or have good potential for future development can present more affordable opportunities.

West Virginia is the least expensive state to buy a house, with a median home value of $167,341, according to the Zillow Home Value Index. In fact, there are many cities where you can find homes priced under $100,000, which is ideal for first-time homebuyers.

Some of these cities include Detroit, MI, Indianapolis IN, Tulsa, OK, Cincinnati, and Cleveland, OH. If you like the snow, Buffalo or Rochester, NY might be worth a look. And if you see yourself in the South, Louisville, KY, Columbia, SC, Memphis, TN, and Baton Rouge, LA all have active listings under 100,000. Of course, a lot of factors, like employment and family, factor into where you choose, but where you look will impact affordability.

9. Rent out a portion of your home

Renting out a room or a portion of your property can generate additional income to help offset mortgage costs and make homeownership more affordable.

This approach is particularly beneficial for homeowners with extra space, such as a finished basement, an accessory dwelling unit (ADU), or a separate guest house. Renting out a portion of your home can also provide other advantages, such as shared utility expenses and potential tax benefits.provide other advantages, such as shared utility expenses and potential tax benefits.

When considering renting out a portion of your home to make homeownership more affordable, there are several specific examples to explore:

• Accessory Dwelling Unit (ADU): If local regulations allow, you can create a separate living space within your property, such as a basement apartment, a converted garage, or a detached guest house. Renting out an ADU can provide a significant source of rental income while allowing you to maintain privacy in the primary residence.
• Room Rental: Renting out a spare bedroom to a long-term tenant or utilizing platforms like Airbnb for short-term rentals can generate additional income and help offset mortgage costs. This approach is particularly beneficial for homeowners in high-demand urban areas or near tourist destinations.
• House Hacking: House hacking involves living in one part of the property while renting out the remaining space. For example, you could live in the main house and rent out a separate unit, such as a basement or an upstairs apartment, to tenants.
• Renting Out a Portion of the Property: If you have a large yard, you might consider renting it out for events or functions. Additionally, if you have extra storage space, you could explore renting it out for storage purposes.

By implementing these specific examples, homeowners can effectively generate additional income and reduce the overall cost of homeownership. However, it’s important to familiarize yourself with local rental regulations and consider the implications of having tenants on your property.

10. Buy a fixer-upper

Purchasing a fixer-upper home and investing in renovations over time can be a more affordable option than buying a move-in ready home. This approach allows you to build equity and customize the property to your preferences gradually.

When considering a fixer-upper, it’s important to conduct a thorough inspection and accurately assess the potential renovation costs. Additionally, it’s beneficial to prioritize essential repairs and upgrades that will add value to the home. Renovating a fixer-upper can be a rewarding experience, but it requires careful planning and budgeting to ensure that the overall cost remains manageable.

• Lower Purchase Price: Fixer-upper homes are often priced lower than move-in ready homes, allowing buyers to potentially acquire the property at a more affordable cost.
• Equity Building: By investing in renovations and improvements, homeowners can increase the property’s value over time, potentially leading to a higher return on investment when selling the home.
• Personalized Renovations: Buyers have the opportunity to prioritize and budget for renovations based on their preferences and timeline, which can help control costs and make the home more affordable in the long term.
• Energy-Efficient Upgrades: Implementing energy-efficient improvements during the renovation process can lead to long-term cost savings on utility bills, making the home more affordable to own and maintain.

The first step to buy a house

If you’re ready to buy a house, make sure to get pre-approved first. This will help you better understand the costs of home buying, as well as set an appropriate budget for your search. Get in touch with an Embrace Home Loan officer in your area to get started today.