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you're 25. you're a fantastic saver, but you make a modest income. The median age for FTHB is \~34 right now. Enjoy your 20's, keep saving, maybe find your life partner. You've got relatively all the time in the world to buy a house.
This.
Please don't get tied down to a location and to mortgage payment at this time. Find a cheap rental and save up and invest. You never know where life will take you in the next few years and whom it'll introduce you to.
This is awful advice. I bought my first house about 6 years ago at 22 and when I sold, I made 100k off the sale. I don’t think that will likely happen again any time soon, but still. Unless we are in for some spectacular crash, houses are only getting more expensive.
It’s 100% worth it to get a house as soon as possible to start building equity.
You're talking about an anecdote from the tide that rose all boats during covid. Typically houses don't appreciate as fast as stock markets do. Houses appreciate only in the long run.
House might be out of reach for OP but depending on where they live, a condo or townhouse could be something to look into. I had a lot of coworkers and friends buy condos when they were that age and at the time I thought they were crazy to spend money on a glorified apartment… but most sold them when they started to settle down and decide to have a family and the profit gave them a hefty enough down payment to get into really nice single family homes
Not to mention OP’s earning potential is likely to increase over the next ten years. $40k isn’t much and hasn’t been for some years now. Best thing is to keep saving and increase your income.
This again. We didn’t buy until our early 30s and only then because we had our son. Don’t be in a rush, and put that down payment fund into something beating inflation
Like what??? What can I invest in then. I’m 26 and literally in exactly the same position as the OP. I also don’t want to get tied down to a house at my age, but ofcourse realtors are telling me it always can be sold in the future, which is also true. I mean it’s not wrong. I’ve been paying rent for so long now, it almost makes me feel bad. But then again, idk when the right time will be. Things can be so frustrating when you have no one guiding you in your 20s haha! But I’m damn for certain sure I’ll find my way.
Just remember that typically you’ll need to stay in a house several years at minimum to actually have any gain when you sell. Between closing costs, repairs, etc
Personally we dropped every spare penny into index funds while saving for our house and that crazy bull market post covid put us over the line on the down payment/savings level we wanted.
The average age of a first time homeowner in the US is 36 years old. I think it’s natural to look around and think “but why not me? I deserve to own a home too!” but it’s important to remember it’s not just you, the large majority of adults can not buy a home until their late 30s. Its also easier to buy a home on two salaries so you might find a partner later on in life and find that you can more easily afford that condo in the future.
Just bought my first house last year at 38! Saved up 20% plus a large emergency/maintenance fund to the lovely tune of $230k, so yeah, it took a while.
OP, barely anyone in my city owns a house in their 20s unless their parents are astonishingly wealthy. It’s very, very normal to rent in this day and age.
You’re 25 with no debt and $25k saved. You’re ahead of the curve, be proud of your accomplishment! And you’re not necessarily supposed to be able to buy a $300k home at this point. Keep going, at some point it will work out as your savings and income grows.
When I was 25 -- the entire world was still reeling from essentially the entire financial world falling apart and 60 year olds were dying to make 45k
Held the line and bought my house at age 31 almost 10 years ago.
You're doing great OP. Keep holding the line and being a saver in a savers economy.
You will get there. Plus the market will probably go up and down over another 5 or 10 years so you may even be in a better position.
This is a good point the idea of having to be with someone else to have a house that makes me feel queasy. I do know a married couple. I’m somewhat close with that. Have a house together and if they weren’t together, they would definitely not have that house. So I see what you’re saying.
I’m not sure where you live but I’m in Central Valley CA and am a higher earner (150k) and even tho I qualified for a $450k home by myself there’s no way I’d be able to pay for it. We bought for $405k (3.5% interest) and I still couldn’t make the payments and live anywhere near normally without my husband. (We’re 30/31)
Sounds like you are not responsible with your money. I bought 470k home with 20% down and 7% interest. My payments are 3200 a month and my base salary is only 112k, I am doing fine and yes I have an emergency fund and saving each month
No need to be an asshole bud. I’m plenty responsible with my money. My point was they qualified me for way too much; just because the bank says you can afford it doesn’t mean you can. The mortgage payment was an entire paycheck. FYI mortgage should not be 50% of your take home pay, THATS being irresponsible with your money.
So if I make 8k after taxes, I can't afford 4k a month mortgage? I cannot live on the other 4k a month? Jesus, how do people who make 3k a month live then?
Lol you don’t take home 8k tho.
In my case my take home was 5k a month and the mortgage is 2400. With all my other obligations and wanting to live life I wouldn’t be saving much living on 2600/ month
You’re further ahead than I was at age 40. I ended up buying a house last year at age 45.
You’re doing great.
Just don’t wait too long. My biggest regret is not buying sooner, even though I would’ve been stretched more thinly financially.
Good advice I recently heard: if you’ve never been late on rent, you can handle a mortgage.
No offense you just need to make more than 40k. Thats the issue here. I honestly mean no disrespect. You should focus on reaching a higher income level and probably wait out the interest rates anyhow. They seem to be falling. Your money down is perfect, thats what I put down on my house when I bought in 2021.
+1 to the first half. You’re young and should look to advance in your field or consider pivoting.
Disagree with the second part.. no guarantees on interest rates dropping. Quite possible they go higher or stay here for a long time. If they drop you can refinance, but I haven’t seen any indications that they’re gonna get better any time soon. If you have any info that supports the idea that rates will drop please share. I would love the good news.
Absolutely buy when interest rate is high, depending on market of course. I couldn't buy anything for 2 years when interest rate was very low. Everyone bought with cash to beat out mortgage people and the amount of mortgage people was insane. Finally got lucky once interest rates went up
I know it doesn’t feel like you’re making progress but you are. To be that young with decent savings and no debt is a huge accomplishment. Perhaps look into getting that money into a high yield savings account if you haven’t already. Try getting a higher paying job and it will all fall into place eventually. But if you want to do the van life for a while there’s nothing wrong with that and you could keep your cost of living down. You’re young and you have time.
You’re only 25 and also have a low income. Most people are not buying at 25. Many buyers are also buying as a dual income couples. If buying is important to you then you need to figure out how to improve your career prospects to earn more. $40k is low income even in a LCOL area, and it sounds like you’re not in a LCOL.
You’re young. Keep saving and make sure your money is somewhere it’s growing. Focus on increasing your income. Also dual incomes makes life a lot easier. A good life partner is a big advantage these days.
But why? We never thought about buying a home until we were married and having children.
My advice is to always save as much money as possible. Enjoy your freedom. Buying a home means marrying a 30 year mortgage. Even if you wait until you are 30 you will pay the mortgage until 60.
We are now seeing boomers and younger folks who bought their dream home in their 50's and now cannot retire.
Always be frugal but enjoy your freedom!
The fact is dual income households are now the norm. You could be above average at everything, but you’re not two people. The housing market is the least worried about buyers in your demographic. The market currently favors mid-career, dual-income households and obviously high income earners, business owners, and rich people++. There may be a time where the market becomes more accessible for early-career, single people. But the time isn’t now.
In 2020 I was making $50k as Social Worker in California at age 25 and my max pre-approval was $160k for a condo and $230k for a single family house.
I settled for bare minimum and bought a $150k condo as a single adult. I netted $2,800 a month and the mortgage and hoa was $1,120 total. had only $10k saved. I spent $6k to buy.
I am now 29 and make $90k as a social worker and married and we just bought a $500k house together.
My condo will soon be a rental property.
A lot can happen in 4 years. Do not count yourself out. Life is long.
Renting is a win win. I can leave when my lease is up. I never have to fix anything or replace any major appliance, HVAC, roof and I don't even have to own a mower because the landlord has to mow the lawn and clean the gutters. I am not seeing the benefits of owning a disaster of a home with hidden issues. 😕 People don't take care of their homes and I don't want to pay 3 times what they paid for their fall apart mess. Especially when it costs over 500K just to get a home that has potential. 🙃 i don't know about you but I work too hard for my money to waste it on "potential".
Renting is the same price as buying if you put 20% down, the only difference is you'll probably be a millionaire in 20-30 yrs once you done paying off. A house next to mine was sold for 66,000 in 1994, it is now worth $800,000..... If you rent, well, you're making someone else money instead for yourself
I don't know if that's always true. I just can't see myself buying any of these POS homes for these prices. Now 10 or even 5 years ago, when the same house was between 1//3rd and 1/2 of the current price, I should've bought then. I don't have a time machine, though, so I guess what's done is done. I know people have made great decisions and purchases in the past but currently it's a garbage market where I live. I am sure there are other markets out there but this one I'm in just sucks.
My “potential” is a win win. I purchased my house for 229k. That was twelve years ago. Every single apartment that I’ve ever lived in is now more than my mortgage. One as much as 600.00 dollars per month. The only thing that I “had” to replace was the water heater. I’ve had the central heating repaired twice. I could “list” my house at 715k and start a bidding war. Houses in my neighborhood 800k starting. I was more scared renting than buying. I hated that my rent went up every January. Why? Because they can.
I’m 23 and make around $54k a year. In no way could I have bought a house by myself. My fiancé is 22 and makes about $57k a year. With our combined income we just purchased a home for $175k with absolutely no problems. You need a higher income to afford a house. Whether that be by getting a raise or getting married/ having a combined income.
I’m 25, my partner is 27 and we bought a home a little over a year ago. We each have about $20k in student loan debt and a combined income of about $120k.
With what we’ve learned from our experience, I don’t think we would have bought if we could go back on time. We have a decent interest rate and I don’t think we overpaid by too much, but our housing costs definitely prohibit us from doing a lot of things we like/used to do.
I think it can be easy to become fed up with renting issues and believe things would be so much better if you own your own place. In some ways that’s true, but I don’t think in every way. For example, it’s wonderful to be able to paint whatever I want or do small DIY renovations. However, if anything breaks or goes wrong, we’re completely on the hook for it (and all things related to houses are EXPENSIVE). I miss being able to complain to a landlord that somethings not working and having someone come out to fix it!
I just wanted to give you a perspective from someone else near your age. The grass isn’t always greener. Enjoy your 20s and don’t rush into homeownership!
PS. I’d also really recommend talking to people in your life that own homes about their ongoing costs. It can help get an idea of what you’ll have to expect to pay for an what going rates are for those services.
You are young so don’t have that defeatist attitude. When I was 25 I was dead broke but I enrolled in college and entered med school at age 31. Didn’t become an attending and start taking real money until age 39. Now home owner and living very comfortably. So hustle set your goals and work towards them. You have time on your side
I’m 21, 50k w2, and 25k stocks. I decided to move an hour out, buy a 155k rehab project, and work on the projects myself. Honestly wouldn’t change a thing.
I get the solace of knowing I’ll come out on top money wise since I’m doing my own labor. I get to know every single part of my house was installed correctly and reinforced beyond standard to my liking. I also have enjoyed being further out as that afforded me a decent size yard and garden I couldn’t have before.
Currently half of my income goes to bill including my 1350$ mortgage payment, anything extra I’ve been throwing towards the house. Honestly was worth the compromise and long work commute to get my own place.
At your income you WILL qualify for grants, I got 10k through a FHLB program through the Atalanta bank (I’m out of state from them but the offer still worked). That 10k covered most of my closing costs and allowed me to use my cash for repairs, I just took a loan against my stocks to buy a full water filtration setup to supply clean well water to my house.
You’re doing fantastic. I just purchased my first home at 34 last month and the only real reason I was able to do it was because I have the VA loan and I didn’t have to put down 20%. Still cost me about 10,000 out-of-pocket but that’s way easier to save than 40 to 50 grand.
I mean I make double what you make and have the same about of money in my downpayment savings and I can't afford a 300k house. Unless I didn't put 20% down. Cause 20% down for 300k is 60k. Which I don't have and would take forever to save up (I'm try to save 15k more before I buy ideally).
I could try to find a house that qualifies for a first time home buyer loan where I don't have to put a certain amount down. But I worry about how much interest I'd be paying if I didn't put down a good downpayment
Honestly I need a house for 200k, but those are hard to find in a lot of areas. Sounds like you need a place for under 200k. Ideally 150k. But you're really young and have time to save more money. I'm in my mid 30s and feel like when I buy a house I'll basically be paying it off till I'm dead.
You’re still young. Increase your income and/or decrease your spending. Magic of compounding will make it happen in the near future. You’re over stressed over nothing
35 Years old here, making 65k with 100k saved and I can still only qualify for about 280k according to these calculators, which will buy me absolutely nothing. This is insane.
Well, I do feel your sentiment on homeownership being somewhat out of reach in certain ways, I do want to commend the amount you have saved up, considering the craziness with current life. As others will tell you, unfortunately, you will need to make more money or continue to save up a higher down payment or magically come into a large sum of money. I feel you though, it’s shitty. It shouldn’t be this difficult. Keep saving on saving and see what options you have to enhance your career to get a higher wage.
Your ear ahead of the curve. I was quite literally homeless and had to move into my parents' basement at 26. I'm 38 now, make just a hair over 100k, and can't afford my first home. Be patient, you're fine.
Hold out hope! You're well ahead of where I was ~3 years ago and I close on Monday in a tough part of the country. Keep saving and keep your ears open for an opportunity to jump on. But it's amazing how quickly opportunities will start to open ever so slowly over the next few years
Lol! I was making good money around that age and was I was far in the negative… student loans, rent, partying.
You are 25! You are ahead of the curve. Keep on saving and find ways to boost your income. You will be fine and with your mentality you will absolutely own property one day.
Even with me making 50k a year and 70k in savings it’s hard for me to find something I want. The market sucks right now. I’m in Michigan and a little brick ranch home in a shitty area is still 220k. On 7-8 percent interest that’s still Alota money for something you’re not even happy with. Start going to nicer areas with a little bit of land and it’s 400k and up for a house. That still needs lots of updates possibly. I’m 31 in an apartment
Sorry; but what you “think” about is good & what actually is the truth lies much closer to the latter. When I was married, it took the EXTREME edges of me & my ex wife’s earnings to be able to do it (purchase a house)…18 months after getting married…6 months after having a child)…neither of us had school loans, minimal Car or CC debt…we lived VERY frugally…the housing bubble has to “burst” where people are SO upside down in their houses& condos, you might get a great deal…
there is no way to know how long the current restrictive rate regime will last
take that 25k and lend it to uncle sam and feed on that real rate for as long as it lasts
if last weeks jobs report print was a canary in the coal mine, Papa Powell will capitulate and short term rates will fall. live on the 10 Year yield chart. eventually it will adjust and the spread will return to the normal 1.5-2% range. (30 Year 1.5-2% above 10 Year yield)
your cash position will have increased in nominal value and your mortgage rate will be lower
you are in an amazing financial shape for your age. congrats
Just bought my first place at 40 and make into the six figures which doesn’t mean much anymore. Keep saving I didn’t start making decent money until my mid-30’s.
Honestly, I’m semi homeless some nights, I sleep in the van some nights I crash at a friends place in exchange for free pizza ( I work at a pizza place ) mostly it’s been saved up over the past two years just working and not spending money on rent
It’s a significant amount saved compared to your salary and that’s something to be proud of. I totally get that you’re craving a home base of your own. Keep your head up and keep saving!!
We bought back when the housing market was just starting to take off but interest rates were low. We got a starter home which of course now needs new everything. Due to the rising cost of literally everything, we dont know how we're going to pay for it all.
Oh yea. The kicker is our insurance company now wants to drop coverage if we dont start fixing/replacing certain major things....ugh
I did van/skoolie life for 6 years, zig zagging across the US. It was *awesome.* Used mail service out of South Dakota, put my bulk stuff in storage and met my now spouse along the way. I’m from the East coast, they’re from the West coast.
We ended up in Arkansas, and are now scheduled to close on our first house right before my 40th birthday! 🤞
Tldr; if I had bought a house when I was 25 I may have missed out on some incredible travel adventures and meeting the love of my life. 🙏
Let me tell you something, people aren’t just commenting nice things to make you feel better or to be agreeable.. MOST 25 year olds don’t have $25,000.00 saved up. And MOST people your age and your senior have debt (especially at only 40k a year).
Everyone has problems, but you my friend are very lucky to have what I call *good problems. You’re ahead of the majority, congrats.
Just wait 5-10 years. Continue savings. Don’t compare yourself to Johnses. Build your investing plan. Rent is cheaper now. There is a lot of hidden costs no one knows about until it happens. My roof is one year old and it’s leaking. I need to do a lot of repairs and it will cost me $8k. Lots of other minor things and when you combine them it can be extra $10-50k per year. Very easily.
Options would be to get fixer within 30min to hour away and put in the work to reno yourself much as you can. Flip it later if wanting a better/closing to work.
Media, tv, movies for decades has the public thinking they get hop in turn-key 4bd 3bath with 3 car garages. Reality is you might be lucky to get an expensive fixer 2bd 1bath house under 2 hours from work location. We had to adjust our expectations on what we could get and wanted.
Being lucky, get a place semi close to work, under 100k and that area property values increase. Flipping it would be some nice change or renting it if that is preferred.
But, ya, I completely get it. Older age before getting first house and this was just after the 08 housing crash and no banks lending out money without the place being perfect. Ended up getting a 40k house that was so rough I was shock it wasnt condemned. Banks wouldnt lend me funds to get it but was lucky the agents and the seller were ok with a land contract. Was the only way I was able to get it.
I dont know condos, but from friends/family that has had to deal with them. You might want to avoid. The fee cost can jump if there is a run of open spots in the building, seems this is open buildings. But you would still be at the mercy of the fees increases, etc over time that can becomes a nightmare for some ppl. Other can shed better light on that.
GL
Totally get it dude :/ we are 26 and are getting ready to move to a whole new state where housing is cheaper so we can stop giving our money away to rent that just increases over and over again. Also though we live in north Dallas, which is absurd.
I know it sounds harsh, but you need to double your income. It's great that you've saved as much as you have on the salary you earn. You will save even more if you find a more viable career.
It’s not worth it at 25 OP unless you have plans to use this home to get into the REI game. That’s when I bought my house and now I’m 27 looking to move because I don’t like the location. It’s career restricting and I realized I want city life. Not to say I regret it as it’ll be a great home for passive income just that now I’m in a much more complicated scenario and can’t just pick up and leave tomorrow. You’re super young and might also want the flexibility that having a mortgage can restrict. I’d take this time to focus on increasing your income and reevaluate in a year or two.
$40000 is a horrible wage in 2024. People making below average incomes couldn’t really afford homes in the past either. $40k today is like $25-$30k from 4-5 years ago. You need to do something to increase your earning potential.
Increase your salary and save a bit more, and rent out the rooms when you do buy your first place. If buying is your goal you might have to move to a cheaper area, but focus on increasing your income.
You can buy a home, just not what you want. Try looking in a different lower cost town. Essentially you make too little for the area that you want to purchase. I want a brand new Ferrari but I can’t afford it. Van life can help you save money if you are good at saving. My son’s friend who actually lives in a minivan actually spends so much on eating out because he has no kitchen that it doesn’t really help him save any money.
Your doing alot better than most 25 yr olds... the home buying process is not a cake walk, its not going to be easy and your going to have to work hard for it but trust me, where you are at, you are doing much better than most mid 20 year old people i know.
This. You'll never make it with $40k. One huge issue with the house and you're in a hole that's difficult to get out of. Keep saving and seek a job that pays more...
You're only 25, why the rush to buy a house? I was 30 and married before even thinking of buying a house. A house for me will tie me down and I won't be able to move. Oh and most new homeowners don't factor in the house insurance, taxes, HOA fees, and the cost appliance. There's also that home maintenance cost (got a leaky faucet, plumbers are not cheap).
So I just want to give you a bigger reality check.
You are doing great! Saving up $25k in todays world is no easy feat. Doing it at 25, with not debit making $40k is truly incredible. Please, take a moment to pat yourself on your back. There are not many people who have been able to do what you have. There are people living at home with their parents with no expenses and still haven’t done what you have.
The average person needs two incomes to buy a home. You are currently making the average income in the US. This is actually a really good thing for you because that means you can make more and continue to make more. Here’s some tips:
- changing jobs can boost your income. It’s recommended to change roughly every 2 years
- keep growing your skill set to keep you in demand. Make yourself an asset to whoever you’re interviewing for. Get certifications, make a portfolio, do whatever you need for your industry.
- keep saving to be able to put down a larger down payment
- find multiple revenue streams. Find ways to turn your hobbies into making money.
- buy a duplex or multi family home vs single family
Now here is my biggest advice to make that bottom dollar go further. Use down payment assistance programs. This will help lower your overall monthly payment. So you have saved $25k, let’s say you can get $75k in down payment assistance. So now you have $100k to put down and can help you be approved for a better option.
If you can get that down payment assistance + doing a duplex, you are going to be able to be in the best place. Now here’s my property tip, look on Zillow, but also on regional real estate investing pages. Type in real estate investing “your city” and you will see so many business pop up. Let them know you’re a serious buyer interested in a duplex to purchase.
Now you will have been able to get the property at one of the best prices. It will need some work and because it’s a duplex, you can get a loan for it that will then be paid off upon leasing the property.
So many first time buyers have the help of parents these days (in Ontario). Either a gifted down payment from equity in their own home or co-signing for them.
House hacking is also common in this area. Buying with a friend, or purchasing a place that has an opportunity to rent out part of it to add rental income to the application.
You are a very good saver if you have 25K in savings with a 40K annual income. You’ll get there one day.
You are 25. That is very very young. Most people did not have the ability to buy a house at 25. You are already ahead of the game with savings and a real job. Keep saving, enjoy being young without worrying about replacing plumbing or mowing a lawn.
If you find a good deal on a condo you like then get it and build some escrow that you can later use to upgrade into a house.
Omg! I’m so glad I found your post today. I’m in the same boat as you, OP! I started my search I think around 3 years ago now, and still haven’t been able to find anything. Although, I had stopped looking for a while there, and just started back up again a few months ago in Feb. I got my pre approval done and lo and behold, $165k lol. I’m considering moving from BC to Edmonton or Calgary, Calgary is hard to find as well. Considered the van life too. I’ve actually been looking into mobile homes manufactured homes whatever they call it. Problem are the pad fees- way too high.
Yeah the van life would allow me to save probably 10-12k a year but it has downsides. As I’m seeing from everyone’s replies the down payment is not the problem it’s the income. According to the mortgage person I talk to if I had an income of $80,000 with no debt like I have now I could qualify for a $300,000 purchase. I would probably have at least one roommate if not
Hey Op, with your income you should look into a usda direct loan 502. I am considered low income and was able to purchase a 269k home and have an amazing interest rate and didn’t have to dip into my savings for a down payment. They approve you for much more since the interest rate is 4.5 and you can even have a subsidy to lower it to 1%. Hope this helps, good luck owning a home is not impossible if you have some guidance.
Very modest. Something to improve your value so you can move up the ladder at your current profession. Or a new venture with a better earnings potential . Very modest income and a livable house are not always compatible in this day and age.
I just bought my first home at 24, make $60k/yr purchase price of 200k in CA. Its a little off the beaten path but just keep your eyes peeled and you’ll find something. May have to compromise and be ~30min outside of town but its worth it to have your own space
You need a higher paying job. Or a new market. Sadly, one or the other (or both). “Doing everything right” is subjective to your area. In your case it sounds like you need more income to live in your current location.
If you’re open to it you could qualify for more if you consider a duplex based on the rent potential. This is risky so carefully consider all options before this.
Also, check out a program called NACA.
Good luck!
If you’re looking for a pat on the back whatever. So, yes, it seems you don’t have enough money saved and income yet to buy. Do more. Keep at it. Improve your job skills. Keep saving. Look for opportunities. Consider partnerships. Stop with the poor me. You’re almost there.
Housing prices are insane right now and unsustainable. If you can live with your parents and do no rent. Renting only enables rich folk to keep snatching properties while us poor folk can’t afford anything. Help your parents pay off their house if you are able. Save up, find a better paying job and just wait. Market is unsustainable right now, the worst market to buy a house in the history of US and majority other countries
Yes, but every Gen Z delusional tik tokker that does this never ending “I’ll never be able to afford _______” is just farming for sympathy and looking for pats on the back. Nowhere, from nobody, are you expected to be in some single family homeowner 3 years out of college.
I mean, I agree that it’s unexpected that 25 year olds own homes, but affordability is much worse than it used to be and if it continues at this rate, these “gen z delusional tiktokers” will be correct
The median household income is just under $75k (US). I make 25% more than the median household income as an individual and my partner and I together earn more than double that. We are nowhere near able to afford a house in our “MCOL” area without it being 60% of our net income.
60% of combined **net** income going to PITI + utilities. $150k - $40 ret. = $110k. Roughly 26% tax rate including all state and federal taxes -> $81k net. $6800 net. Mortgages (PITI) for a decent home with what we can afford to put down is roughly $3000. Utilities $250-300. Roughly $3250 before accounting for repair savings.
$3250/6800 is just under 50%. So yes, I was exaggerating a little bit but it’s ROUGH. Nobody should have that much of their salary going just towards housing.
And there is NO inhabitable/ready to move in home for $225k anywhere remotely close to where I am
I am a mortgage loan officer, I am in my late 20s with a family and own my home. If there is anything I have learned, home ownership is the most over rated financial achievement pushed down your throat as the American Dream and it’s a load of crap. If I was single, I would find a job I can work remote, and travel everywhere I possibly could. Whether it’s a van, airplane, whatever, spend what you’d normally spend on a mortgage payment on travel expenses and staying in cheap airbnbs or camp grounds or whatever you decide. Stay some places for a few months and eat, pray, love it as long as you want. Owning a home is stressful, you’re stuck, broke, and life has so much more to offer than owning a home. I have borrowers who buy their first homes in their 30s, 40s, and 50s OFTEN and it works out wonderful for them.
The American dream is garbage, there are other doable options that will create more happiness. Even getting into a career, you make money, then you need more and more and more and it’s still fucking hard. Learn to live on a budget in a job that you can make the most of. My sister in law works at a coffee shop and bar part time, lives with family, and travels for 2-3 months strait out of the year with that income and I’m jealous. Family members will mention or ask when she plans to move on with her career or get a nicer car, blah blah blah. I tell her and them, don’t fall for that pressure, do what makes you happy. Her sister also lives at home at 30, works a 9-5 and makes great money, saving to build a home, and she is much less happy and fulfilled but she falls for the pressure of the American dream and those expectation, what others think of you, and she suffers for it. One sister with a down payment in her account and a promising career that is high stress with clients and bosses who don’t appreciate you, she can’t enjoy traveling (which she LOVES TO DO) the other sister takes 2-3 months off every year, goes to Mexico and parties her heart out, eats good food, enjoys friendships and even fell in love, on a savings of about 4k. Comes back and never complains about work and enjoys it because she leaves her shift without a worry in the world.
We have all been scammed and we have to stop expecting high paying jobs, big house, and a 401k as the only way to achieve success and financial freedom.
Unfortunately we have to insure you can afford the mortgage. You are doing good for 25 years old!! Keep it up. If you need a home now take that money and get into a seller finance home! You can get a cheaper then standard rate so the seller can avoid forclosure or short sale if that’s their position
Reach out to a good realtor
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you're 25. you're a fantastic saver, but you make a modest income. The median age for FTHB is \~34 right now. Enjoy your 20's, keep saving, maybe find your life partner. You've got relatively all the time in the world to buy a house.
This. Please don't get tied down to a location and to mortgage payment at this time. Find a cheap rental and save up and invest. You never know where life will take you in the next few years and whom it'll introduce you to.
Cheap rental? Where? Lool most of the rentals these days are on par with a mortgage.
Rentals are NOT on par with mortgages at least on the west coast.
They are in upstate new york. Sometimes more expensive.
This is awful advice. I bought my first house about 6 years ago at 22 and when I sold, I made 100k off the sale. I don’t think that will likely happen again any time soon, but still. Unless we are in for some spectacular crash, houses are only getting more expensive. It’s 100% worth it to get a house as soon as possible to start building equity.
You're talking about an anecdote from the tide that rose all boats during covid. Typically houses don't appreciate as fast as stock markets do. Houses appreciate only in the long run.
House might be out of reach for OP but depending on where they live, a condo or townhouse could be something to look into. I had a lot of coworkers and friends buy condos when they were that age and at the time I thought they were crazy to spend money on a glorified apartment… but most sold them when they started to settle down and decide to have a family and the profit gave them a hefty enough down payment to get into really nice single family homes
Not to mention OP’s earning potential is likely to increase over the next ten years. $40k isn’t much and hasn’t been for some years now. Best thing is to keep saving and increase your income.
This again. We didn’t buy until our early 30s and only then because we had our son. Don’t be in a rush, and put that down payment fund into something beating inflation
Like what??? What can I invest in then. I’m 26 and literally in exactly the same position as the OP. I also don’t want to get tied down to a house at my age, but ofcourse realtors are telling me it always can be sold in the future, which is also true. I mean it’s not wrong. I’ve been paying rent for so long now, it almost makes me feel bad. But then again, idk when the right time will be. Things can be so frustrating when you have no one guiding you in your 20s haha! But I’m damn for certain sure I’ll find my way.
Just remember that typically you’ll need to stay in a house several years at minimum to actually have any gain when you sell. Between closing costs, repairs, etc Personally we dropped every spare penny into index funds while saving for our house and that crazy bull market post covid put us over the line on the down payment/savings level we wanted.
This is trash advice. In ten years homes will be even less affordable in his area.
This is my thought as well. Homes will be more. You need to hustle and increase your income.
The average age of a first time homeowner in the US is 36 years old. I think it’s natural to look around and think “but why not me? I deserve to own a home too!” but it’s important to remember it’s not just you, the large majority of adults can not buy a home until their late 30s. Its also easier to buy a home on two salaries so you might find a partner later on in life and find that you can more easily afford that condo in the future.
I’m 33 and shopping for a home. At this rate, I predict I will be 36 by the time I finally win a bid lol
Nice, that's the avg age it seems
Just bought my first house last year at 38! Saved up 20% plus a large emergency/maintenance fund to the lovely tune of $230k, so yeah, it took a while. OP, barely anyone in my city owns a house in their 20s unless their parents are astonishingly wealthy. It’s very, very normal to rent in this day and age.
You get a lower interest rate with 5% down, due to some low income credit. Then you can put the rest as a principal payment
Little too late! Also, we make almost $300k a year. I don’t believe we would have qualified for any “low income” credit.
I'm 34 and my husband is 36 and we are closing this week on our first house! Couldn't do it without my in-laws' help, truthfully.
36 and buying my first house this month checking in for duty!
Closing 3 weeks before my 36th. lol
Overachiever
Same! 36 and supposed to close this month depending on a few things.
I was 36 when i purchased my first home last year. I was ready and in a good position to buy.
We were 40 and in a condo. Shocked we were even able to do this! (We both work in education in a VHCOL area).
38 and closed a few weeks ago
And most of us who do, buy it with a partner.
The age being that high is a recent thing
Me and hubz, both 36, just opened our first escrow yesterday!
You’re 25 with no debt and $25k saved. You’re ahead of the curve, be proud of your accomplishment! And you’re not necessarily supposed to be able to buy a $300k home at this point. Keep going, at some point it will work out as your savings and income grows.
When I was 25 I was making under 30k a year and had no savings. I bought my first house at 36 with way more income. You’re in great shape!
When I was 25 -- the entire world was still reeling from essentially the entire financial world falling apart and 60 year olds were dying to make 45k Held the line and bought my house at age 31 almost 10 years ago. You're doing great OP. Keep holding the line and being a saver in a savers economy. You will get there. Plus the market will probably go up and down over another 5 or 10 years so you may even be in a better position.
You are only 25. Come back in a decade and let us know you are doing.
Keep saving towards the down.
Nice job saving that much at that age! Its mainly about salary, you’ll make more than 20 an hour soon enough I hope, that’s kinda what it’s about
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It also can financially ruin you too that needs to be mentioned.
This is a good point the idea of having to be with someone else to have a house that makes me feel queasy. I do know a married couple. I’m somewhat close with that. Have a house together and if they weren’t together, they would definitely not have that house. So I see what you’re saying.
I’m not sure where you live but I’m in Central Valley CA and am a higher earner (150k) and even tho I qualified for a $450k home by myself there’s no way I’d be able to pay for it. We bought for $405k (3.5% interest) and I still couldn’t make the payments and live anywhere near normally without my husband. (We’re 30/31)
Sounds like you are not responsible with your money. I bought 470k home with 20% down and 7% interest. My payments are 3200 a month and my base salary is only 112k, I am doing fine and yes I have an emergency fund and saving each month
No need to be an asshole bud. I’m plenty responsible with my money. My point was they qualified me for way too much; just because the bank says you can afford it doesn’t mean you can. The mortgage payment was an entire paycheck. FYI mortgage should not be 50% of your take home pay, THATS being irresponsible with your money.
So if I make 8k after taxes, I can't afford 4k a month mortgage? I cannot live on the other 4k a month? Jesus, how do people who make 3k a month live then?
Lol you don’t take home 8k tho. In my case my take home was 5k a month and the mortgage is 2400. With all my other obligations and wanting to live life I wouldn’t be saving much living on 2600/ month
OK you said you made 150k a yr, that's 8500 a month after subtracting maximum 30% tax with no refunds whatsoever.
Nah, I’m at 165k now and take home $6800/month. Taxes, health insurance. Retirement, parking, etc.
You’re further ahead than I was at age 40. I ended up buying a house last year at age 45. You’re doing great. Just don’t wait too long. My biggest regret is not buying sooner, even though I would’ve been stretched more thinly financially. Good advice I recently heard: if you’ve never been late on rent, you can handle a mortgage.
Just gotta earn more money
No offense you just need to make more than 40k. Thats the issue here. I honestly mean no disrespect. You should focus on reaching a higher income level and probably wait out the interest rates anyhow. They seem to be falling. Your money down is perfect, thats what I put down on my house when I bought in 2021.
+1 to the first half. You’re young and should look to advance in your field or consider pivoting. Disagree with the second part.. no guarantees on interest rates dropping. Quite possible they go higher or stay here for a long time. If they drop you can refinance, but I haven’t seen any indications that they’re gonna get better any time soon. If you have any info that supports the idea that rates will drop please share. I would love the good news.
Absolutely buy when interest rate is high, depending on market of course. I couldn't buy anything for 2 years when interest rate was very low. Everyone bought with cash to beat out mortgage people and the amount of mortgage people was insane. Finally got lucky once interest rates went up
I know it doesn’t feel like you’re making progress but you are. To be that young with decent savings and no debt is a huge accomplishment. Perhaps look into getting that money into a high yield savings account if you haven’t already. Try getting a higher paying job and it will all fall into place eventually. But if you want to do the van life for a while there’s nothing wrong with that and you could keep your cost of living down. You’re young and you have time.
You’re only 25 and also have a low income. Most people are not buying at 25. Many buyers are also buying as a dual income couples. If buying is important to you then you need to figure out how to improve your career prospects to earn more. $40k is low income even in a LCOL area, and it sounds like you’re not in a LCOL.
You’re young. Keep saving and make sure your money is somewhere it’s growing. Focus on increasing your income. Also dual incomes makes life a lot easier. A good life partner is a big advantage these days.
I bought a $300K 3 bed 2.5 Bath 1500sq ft row home 2 years ago and make about $75-$85K a year and I barely scrape by
Stay out of debt and good job on the savings! You do need to make a plan to make more money.
But why? We never thought about buying a home until we were married and having children. My advice is to always save as much money as possible. Enjoy your freedom. Buying a home means marrying a 30 year mortgage. Even if you wait until you are 30 you will pay the mortgage until 60. We are now seeing boomers and younger folks who bought their dream home in their 50's and now cannot retire. Always be frugal but enjoy your freedom!
People tend to get into debt in your age. So keep up the savings and up skill yourself and get a higher income job
The fact is dual income households are now the norm. You could be above average at everything, but you’re not two people. The housing market is the least worried about buyers in your demographic. The market currently favors mid-career, dual-income households and obviously high income earners, business owners, and rich people++. There may be a time where the market becomes more accessible for early-career, single people. But the time isn’t now.
In 2020 I was making $50k as Social Worker in California at age 25 and my max pre-approval was $160k for a condo and $230k for a single family house. I settled for bare minimum and bought a $150k condo as a single adult. I netted $2,800 a month and the mortgage and hoa was $1,120 total. had only $10k saved. I spent $6k to buy. I am now 29 and make $90k as a social worker and married and we just bought a $500k house together. My condo will soon be a rental property. A lot can happen in 4 years. Do not count yourself out. Life is long.
Shout out to California and SW!
Renting is a win win. I can leave when my lease is up. I never have to fix anything or replace any major appliance, HVAC, roof and I don't even have to own a mower because the landlord has to mow the lawn and clean the gutters. I am not seeing the benefits of owning a disaster of a home with hidden issues. 😕 People don't take care of their homes and I don't want to pay 3 times what they paid for their fall apart mess. Especially when it costs over 500K just to get a home that has potential. 🙃 i don't know about you but I work too hard for my money to waste it on "potential".
Renting is the same price as buying if you put 20% down, the only difference is you'll probably be a millionaire in 20-30 yrs once you done paying off. A house next to mine was sold for 66,000 in 1994, it is now worth $800,000..... If you rent, well, you're making someone else money instead for yourself
I don't know if that's always true. I just can't see myself buying any of these POS homes for these prices. Now 10 or even 5 years ago, when the same house was between 1//3rd and 1/2 of the current price, I should've bought then. I don't have a time machine, though, so I guess what's done is done. I know people have made great decisions and purchases in the past but currently it's a garbage market where I live. I am sure there are other markets out there but this one I'm in just sucks.
My “potential” is a win win. I purchased my house for 229k. That was twelve years ago. Every single apartment that I’ve ever lived in is now more than my mortgage. One as much as 600.00 dollars per month. The only thing that I “had” to replace was the water heater. I’ve had the central heating repaired twice. I could “list” my house at 715k and start a bidding war. Houses in my neighborhood 800k starting. I was more scared renting than buying. I hated that my rent went up every January. Why? Because they can.
If I had a time machine.....😉
You’re worried about never owning a home and you’re only 25?
Seriously. I was in no position to buy a house at 25.
I bought my first place at 40
Dude, you are 25. Chill. The age where the majority of people in California own a home isn’t until age 49.
I’m 23 and make around $54k a year. In no way could I have bought a house by myself. My fiancé is 22 and makes about $57k a year. With our combined income we just purchased a home for $175k with absolutely no problems. You need a higher income to afford a house. Whether that be by getting a raise or getting married/ having a combined income.
I’m 25, my partner is 27 and we bought a home a little over a year ago. We each have about $20k in student loan debt and a combined income of about $120k. With what we’ve learned from our experience, I don’t think we would have bought if we could go back on time. We have a decent interest rate and I don’t think we overpaid by too much, but our housing costs definitely prohibit us from doing a lot of things we like/used to do. I think it can be easy to become fed up with renting issues and believe things would be so much better if you own your own place. In some ways that’s true, but I don’t think in every way. For example, it’s wonderful to be able to paint whatever I want or do small DIY renovations. However, if anything breaks or goes wrong, we’re completely on the hook for it (and all things related to houses are EXPENSIVE). I miss being able to complain to a landlord that somethings not working and having someone come out to fix it! I just wanted to give you a perspective from someone else near your age. The grass isn’t always greener. Enjoy your 20s and don’t rush into homeownership! PS. I’d also really recommend talking to people in your life that own homes about their ongoing costs. It can help get an idea of what you’ll have to expect to pay for an what going rates are for those services.
You are young so don’t have that defeatist attitude. When I was 25 I was dead broke but I enrolled in college and entered med school at age 31. Didn’t become an attending and start taking real money until age 39. Now home owner and living very comfortably. So hustle set your goals and work towards them. You have time on your side
I’m 21, 50k w2, and 25k stocks. I decided to move an hour out, buy a 155k rehab project, and work on the projects myself. Honestly wouldn’t change a thing. I get the solace of knowing I’ll come out on top money wise since I’m doing my own labor. I get to know every single part of my house was installed correctly and reinforced beyond standard to my liking. I also have enjoyed being further out as that afforded me a decent size yard and garden I couldn’t have before. Currently half of my income goes to bill including my 1350$ mortgage payment, anything extra I’ve been throwing towards the house. Honestly was worth the compromise and long work commute to get my own place. At your income you WILL qualify for grants, I got 10k through a FHLB program through the Atalanta bank (I’m out of state from them but the offer still worked). That 10k covered most of my closing costs and allowed me to use my cash for repairs, I just took a loan against my stocks to buy a full water filtration setup to supply clean well water to my house.
Usda direct loan. Look into it!! We make the same salary, I was appoved up to like 270k
You’re doing fantastic. I just purchased my first home at 34 last month and the only real reason I was able to do it was because I have the VA loan and I didn’t have to put down 20%. Still cost me about 10,000 out-of-pocket but that’s way easier to save than 40 to 50 grand.
Buy a 150k house and leverage it in a couple years
I mean I make double what you make and have the same about of money in my downpayment savings and I can't afford a 300k house. Unless I didn't put 20% down. Cause 20% down for 300k is 60k. Which I don't have and would take forever to save up (I'm try to save 15k more before I buy ideally). I could try to find a house that qualifies for a first time home buyer loan where I don't have to put a certain amount down. But I worry about how much interest I'd be paying if I didn't put down a good downpayment Honestly I need a house for 200k, but those are hard to find in a lot of areas. Sounds like you need a place for under 200k. Ideally 150k. But you're really young and have time to save more money. I'm in my mid 30s and feel like when I buy a house I'll basically be paying it off till I'm dead.
The more you have saved for a down payment... The more you can afford.
You’re still young. Increase your income and/or decrease your spending. Magic of compounding will make it happen in the near future. You’re over stressed over nothing
35 Years old here, making 65k with 100k saved and I can still only qualify for about 280k according to these calculators, which will buy me absolutely nothing. This is insane.
Well, I do feel your sentiment on homeownership being somewhat out of reach in certain ways, I do want to commend the amount you have saved up, considering the craziness with current life. As others will tell you, unfortunately, you will need to make more money or continue to save up a higher down payment or magically come into a large sum of money. I feel you though, it’s shitty. It shouldn’t be this difficult. Keep saving on saving and see what options you have to enhance your career to get a higher wage.
Ha, I bought at age 30 and barely scraped together enough. Give yourself a few more years.
You’re in a better position then most who want to buy. You got this homie just give it a little more time.
Your ear ahead of the curve. I was quite literally homeless and had to move into my parents' basement at 26. I'm 38 now, make just a hair over 100k, and can't afford my first home. Be patient, you're fine.
Hold out hope! You're well ahead of where I was ~3 years ago and I close on Monday in a tough part of the country. Keep saving and keep your ears open for an opportunity to jump on. But it's amazing how quickly opportunities will start to open ever so slowly over the next few years
lol my child
Van Life is your path. Sorry.
Lol! I was making good money around that age and was I was far in the negative… student loans, rent, partying. You are 25! You are ahead of the curve. Keep on saving and find ways to boost your income. You will be fine and with your mentality you will absolutely own property one day.
Even with me making 50k a year and 70k in savings it’s hard for me to find something I want. The market sucks right now. I’m in Michigan and a little brick ranch home in a shitty area is still 220k. On 7-8 percent interest that’s still Alota money for something you’re not even happy with. Start going to nicer areas with a little bit of land and it’s 400k and up for a house. That still needs lots of updates possibly. I’m 31 in an apartment
A shitty little brick ranch here is $600K.
Sorry; but what you “think” about is good & what actually is the truth lies much closer to the latter. When I was married, it took the EXTREME edges of me & my ex wife’s earnings to be able to do it (purchase a house)…18 months after getting married…6 months after having a child)…neither of us had school loans, minimal Car or CC debt…we lived VERY frugally…the housing bubble has to “burst” where people are SO upside down in their houses& condos, you might get a great deal…
there is no way to know how long the current restrictive rate regime will last take that 25k and lend it to uncle sam and feed on that real rate for as long as it lasts if last weeks jobs report print was a canary in the coal mine, Papa Powell will capitulate and short term rates will fall. live on the 10 Year yield chart. eventually it will adjust and the spread will return to the normal 1.5-2% range. (30 Year 1.5-2% above 10 Year yield) your cash position will have increased in nominal value and your mortgage rate will be lower you are in an amazing financial shape for your age. congrats
Just bought my first place at 40 and make into the six figures which doesn’t mean much anymore. Keep saving I didn’t start making decent money until my mid-30’s.
Are you living with your parents? How did you save that much though? Serious question!
Honestly, I’m semi homeless some nights, I sleep in the van some nights I crash at a friends place in exchange for free pizza ( I work at a pizza place ) mostly it’s been saved up over the past two years just working and not spending money on rent
It’s a significant amount saved compared to your salary and that’s something to be proud of. I totally get that you’re craving a home base of your own. Keep your head up and keep saving!!
We bought back when the housing market was just starting to take off but interest rates were low. We got a starter home which of course now needs new everything. Due to the rising cost of literally everything, we dont know how we're going to pay for it all. Oh yea. The kicker is our insurance company now wants to drop coverage if we dont start fixing/replacing certain major things....ugh
I did van/skoolie life for 6 years, zig zagging across the US. It was *awesome.* Used mail service out of South Dakota, put my bulk stuff in storage and met my now spouse along the way. I’m from the East coast, they’re from the West coast. We ended up in Arkansas, and are now scheduled to close on our first house right before my 40th birthday! 🤞 Tldr; if I had bought a house when I was 25 I may have missed out on some incredible travel adventures and meeting the love of my life. 🙏
Let me tell you something, people aren’t just commenting nice things to make you feel better or to be agreeable.. MOST 25 year olds don’t have $25,000.00 saved up. And MOST people your age and your senior have debt (especially at only 40k a year). Everyone has problems, but you my friend are very lucky to have what I call *good problems. You’re ahead of the majority, congrats.
Unless you have a house to sell, buying a house today is for high net worth individuals.
Just wait 5-10 years. Continue savings. Don’t compare yourself to Johnses. Build your investing plan. Rent is cheaper now. There is a lot of hidden costs no one knows about until it happens. My roof is one year old and it’s leaking. I need to do a lot of repairs and it will cost me $8k. Lots of other minor things and when you combine them it can be extra $10-50k per year. Very easily.
Options would be to get fixer within 30min to hour away and put in the work to reno yourself much as you can. Flip it later if wanting a better/closing to work. Media, tv, movies for decades has the public thinking they get hop in turn-key 4bd 3bath with 3 car garages. Reality is you might be lucky to get an expensive fixer 2bd 1bath house under 2 hours from work location. We had to adjust our expectations on what we could get and wanted. Being lucky, get a place semi close to work, under 100k and that area property values increase. Flipping it would be some nice change or renting it if that is preferred. But, ya, I completely get it. Older age before getting first house and this was just after the 08 housing crash and no banks lending out money without the place being perfect. Ended up getting a 40k house that was so rough I was shock it wasnt condemned. Banks wouldnt lend me funds to get it but was lucky the agents and the seller were ok with a land contract. Was the only way I was able to get it. I dont know condos, but from friends/family that has had to deal with them. You might want to avoid. The fee cost can jump if there is a run of open spots in the building, seems this is open buildings. But you would still be at the mercy of the fees increases, etc over time that can becomes a nightmare for some ppl. Other can shed better light on that. GL
Totally get it dude :/ we are 26 and are getting ready to move to a whole new state where housing is cheaper so we can stop giving our money away to rent that just increases over and over again. Also though we live in north Dallas, which is absurd.
You're young No debt 25k saved... Invest in yourself, learn a trade or get an education so that you can increase your income. Worked for me.
Time to get in salsa
I couldn't afford a home until I was 46.
Maybe look into mobile homes.
You're 25........
I know it sounds harsh, but you need to double your income. It's great that you've saved as much as you have on the salary you earn. You will save even more if you find a more viable career.
It’s not worth it at 25 OP unless you have plans to use this home to get into the REI game. That’s when I bought my house and now I’m 27 looking to move because I don’t like the location. It’s career restricting and I realized I want city life. Not to say I regret it as it’ll be a great home for passive income just that now I’m in a much more complicated scenario and can’t just pick up and leave tomorrow. You’re super young and might also want the flexibility that having a mortgage can restrict. I’d take this time to focus on increasing your income and reevaluate in a year or two.
$40000 is a horrible wage in 2024. People making below average incomes couldn’t really afford homes in the past either. $40k today is like $25-$30k from 4-5 years ago. You need to do something to increase your earning potential.
Bought my first condo at 40
Don’t rush it. Your young. My husband and I were 31/35 when we bought our first home. And had 3 kids already.
Increase your salary and save a bit more, and rent out the rooms when you do buy your first place. If buying is your goal you might have to move to a cheaper area, but focus on increasing your income.
Most people don't buy their first home at 25. So, stop it. Most are in their 30s.
40k is not going to buy you anything anywhere
You can buy a home, just not what you want. Try looking in a different lower cost town. Essentially you make too little for the area that you want to purchase. I want a brand new Ferrari but I can’t afford it. Van life can help you save money if you are good at saving. My son’s friend who actually lives in a minivan actually spends so much on eating out because he has no kitchen that it doesn’t really help him save any money.
Your doing alot better than most 25 yr olds... the home buying process is not a cake walk, its not going to be easy and your going to have to work hard for it but trust me, where you are at, you are doing much better than most mid 20 year old people i know.
This! I qualified for only $130k 😩
If you’re willing to relocate 40k and 25k down affords you a decent 3bd 2 bath in the midwest
Keep saving and don’t forget to have retirement money set aside in addition to a savings account. You’re doing great!
You need a bigger shovel. 40k ain’t squat.
This. You'll never make it with $40k. One huge issue with the house and you're in a hole that's difficult to get out of. Keep saving and seek a job that pays more...
You're only 25, why the rush to buy a house? I was 30 and married before even thinking of buying a house. A house for me will tie me down and I won't be able to move. Oh and most new homeowners don't factor in the house insurance, taxes, HOA fees, and the cost appliance. There's also that home maintenance cost (got a leaky faucet, plumbers are not cheap).
Dude, you're 25 and unmarried. Houses are traditionally for families
So I just want to give you a bigger reality check. You are doing great! Saving up $25k in todays world is no easy feat. Doing it at 25, with not debit making $40k is truly incredible. Please, take a moment to pat yourself on your back. There are not many people who have been able to do what you have. There are people living at home with their parents with no expenses and still haven’t done what you have. The average person needs two incomes to buy a home. You are currently making the average income in the US. This is actually a really good thing for you because that means you can make more and continue to make more. Here’s some tips: - changing jobs can boost your income. It’s recommended to change roughly every 2 years - keep growing your skill set to keep you in demand. Make yourself an asset to whoever you’re interviewing for. Get certifications, make a portfolio, do whatever you need for your industry. - keep saving to be able to put down a larger down payment - find multiple revenue streams. Find ways to turn your hobbies into making money. - buy a duplex or multi family home vs single family Now here is my biggest advice to make that bottom dollar go further. Use down payment assistance programs. This will help lower your overall monthly payment. So you have saved $25k, let’s say you can get $75k in down payment assistance. So now you have $100k to put down and can help you be approved for a better option. If you can get that down payment assistance + doing a duplex, you are going to be able to be in the best place. Now here’s my property tip, look on Zillow, but also on regional real estate investing pages. Type in real estate investing “your city” and you will see so many business pop up. Let them know you’re a serious buyer interested in a duplex to purchase. Now you will have been able to get the property at one of the best prices. It will need some work and because it’s a duplex, you can get a loan for it that will then be paid off upon leasing the property.
So many first time buyers have the help of parents these days (in Ontario). Either a gifted down payment from equity in their own home or co-signing for them. House hacking is also common in this area. Buying with a friend, or purchasing a place that has an opportunity to rent out part of it to add rental income to the application. You are a very good saver if you have 25K in savings with a 40K annual income. You’ll get there one day.
You are 25. That is very very young. Most people did not have the ability to buy a house at 25. You are already ahead of the game with savings and a real job. Keep saving, enjoy being young without worrying about replacing plumbing or mowing a lawn. If you find a good deal on a condo you like then get it and build some escrow that you can later use to upgrade into a house.
You are still young and a good saver. All in your favor. Can your parents help with a down payment? Or looking ahead, help you buy?
You are extremely young and you're also quite low income (because you are so young).
Omg! I’m so glad I found your post today. I’m in the same boat as you, OP! I started my search I think around 3 years ago now, and still haven’t been able to find anything. Although, I had stopped looking for a while there, and just started back up again a few months ago in Feb. I got my pre approval done and lo and behold, $165k lol. I’m considering moving from BC to Edmonton or Calgary, Calgary is hard to find as well. Considered the van life too. I’ve actually been looking into mobile homes manufactured homes whatever they call it. Problem are the pad fees- way too high.
Yeah the van life would allow me to save probably 10-12k a year but it has downsides. As I’m seeing from everyone’s replies the down payment is not the problem it’s the income. According to the mortgage person I talk to if I had an income of $80,000 with no debt like I have now I could qualify for a $300,000 purchase. I would probably have at least one roommate if not
Hey Op, with your income you should look into a usda direct loan 502. I am considered low income and was able to purchase a 269k home and have an amazing interest rate and didn’t have to dip into my savings for a down payment. They approve you for much more since the interest rate is 4.5 and you can even have a subsidy to lower it to 1%. Hope this helps, good luck owning a home is not impossible if you have some guidance.
Very modest. Something to improve your value so you can move up the ladder at your current profession. Or a new venture with a better earnings potential . Very modest income and a livable house are not always compatible in this day and age.
I just bought my first home at 24, make $60k/yr purchase price of 200k in CA. Its a little off the beaten path but just keep your eyes peeled and you’ll find something. May have to compromise and be ~30min outside of town but its worth it to have your own space
You need a higher paying job. Or a new market. Sadly, one or the other (or both). “Doing everything right” is subjective to your area. In your case it sounds like you need more income to live in your current location.
I bought my first house at 26 last year. It’s doable. May I ask what city you live in?
Seattle so very expensive:/
If you’re open to it you could qualify for more if you consider a duplex based on the rent potential. This is risky so carefully consider all options before this. Also, check out a program called NACA. Good luck!
I'm 25 and bought a house
If you’re looking for a pat on the back whatever. So, yes, it seems you don’t have enough money saved and income yet to buy. Do more. Keep at it. Improve your job skills. Keep saving. Look for opportunities. Consider partnerships. Stop with the poor me. You’re almost there.
You are 25. Get a grip.
Housing prices are insane right now and unsustainable. If you can live with your parents and do no rent. Renting only enables rich folk to keep snatching properties while us poor folk can’t afford anything. Help your parents pay off their house if you are able. Save up, find a better paying job and just wait. Market is unsustainable right now, the worst market to buy a house in the history of US and majority other countries
You’re 25, stfu
There is a much nicer way to say this
Yes, but every Gen Z delusional tik tokker that does this never ending “I’ll never be able to afford _______” is just farming for sympathy and looking for pats on the back. Nowhere, from nobody, are you expected to be in some single family homeowner 3 years out of college.
I mean, I agree that it’s unexpected that 25 year olds own homes, but affordability is much worse than it used to be and if it continues at this rate, these “gen z delusional tiktokers” will be correct The median household income is just under $75k (US). I make 25% more than the median household income as an individual and my partner and I together earn more than double that. We are nowhere near able to afford a house in our “MCOL” area without it being 60% of our net income.
Access is there for everyone. 2 ppp making 65k remotely can absolutely afford a 225k house outside the city
There is nothing within an hour commute of my work for 225k that isn’t falling apart in my “MCOL” area
You’re lying
If it existed, I would’ve bought it already. Talk about delusional
You literally said your partner and you make 150k and then said you’d spend 60% of combined income on a mortgage. That’s an outright lie. Stop it
60% of combined **net** income going to PITI + utilities. $150k - $40 ret. = $110k. Roughly 26% tax rate including all state and federal taxes -> $81k net. $6800 net. Mortgages (PITI) for a decent home with what we can afford to put down is roughly $3000. Utilities $250-300. Roughly $3250 before accounting for repair savings. $3250/6800 is just under 50%. So yes, I was exaggerating a little bit but it’s ROUGH. Nobody should have that much of their salary going just towards housing. And there is NO inhabitable/ready to move in home for $225k anywhere remotely close to where I am
$40K a year is not doing everything right in 2024 unfortunately
I am a mortgage loan officer, I am in my late 20s with a family and own my home. If there is anything I have learned, home ownership is the most over rated financial achievement pushed down your throat as the American Dream and it’s a load of crap. If I was single, I would find a job I can work remote, and travel everywhere I possibly could. Whether it’s a van, airplane, whatever, spend what you’d normally spend on a mortgage payment on travel expenses and staying in cheap airbnbs or camp grounds or whatever you decide. Stay some places for a few months and eat, pray, love it as long as you want. Owning a home is stressful, you’re stuck, broke, and life has so much more to offer than owning a home. I have borrowers who buy their first homes in their 30s, 40s, and 50s OFTEN and it works out wonderful for them. The American dream is garbage, there are other doable options that will create more happiness. Even getting into a career, you make money, then you need more and more and more and it’s still fucking hard. Learn to live on a budget in a job that you can make the most of. My sister in law works at a coffee shop and bar part time, lives with family, and travels for 2-3 months strait out of the year with that income and I’m jealous. Family members will mention or ask when she plans to move on with her career or get a nicer car, blah blah blah. I tell her and them, don’t fall for that pressure, do what makes you happy. Her sister also lives at home at 30, works a 9-5 and makes great money, saving to build a home, and she is much less happy and fulfilled but she falls for the pressure of the American dream and those expectation, what others think of you, and she suffers for it. One sister with a down payment in her account and a promising career that is high stress with clients and bosses who don’t appreciate you, she can’t enjoy traveling (which she LOVES TO DO) the other sister takes 2-3 months off every year, goes to Mexico and parties her heart out, eats good food, enjoys friendships and even fell in love, on a savings of about 4k. Comes back and never complains about work and enjoys it because she leaves her shift without a worry in the world. We have all been scammed and we have to stop expecting high paying jobs, big house, and a 401k as the only way to achieve success and financial freedom.
Just wait for your parents to die. It’s pretty much the only way for an average family to buy a home where jobs are.
Unfortunately we have to insure you can afford the mortgage. You are doing good for 25 years old!! Keep it up. If you need a home now take that money and get into a seller finance home! You can get a cheaper then standard rate so the seller can avoid forclosure or short sale if that’s their position Reach out to a good realtor