Buying a House In Your Early 20s: What to Know and How to Plan

Buying a house in your early 20s is more achievable than you think—and it happens every day.

According to the Federal Reserve, 26% of Americans aged 18 to 29 owned a home in 2019, and the National Association of Realtors found that 14% of all homebuyers in 2020 were between 22 and 30.

If you’re ready to buy after school, move out of your parents’ house, or make a change, here’s how you can achieve your home buying dream.

How to Buy a House in Your 20s

If buying a house in your early 20s feels like the right move, follow these steps to make it happen.

1. Start saving now

Start saving as soon as you decide to buy a home. The more you save, the better.

Create a plan, stick to it, and set up a direct deposit to a savings account to automate your progress.

You can buy a house with as little as 3% down, but having extra savings for closing costs or repairs is a smart idea.

2. Explore your finances

Take time to create a budget based on your take-home pay.

When you’re pre-approved, banks calculate based on pre-tax income and bills on your credit report, which shows you how much home you can buy.

Your budget, however, should include all monthly expenses, like utilities and subscriptions, to help determine how much home you want to buy.

3. Get pre-approved

Getting pre-approved helps you:

• See what size loan you qualify for
• Understand your credit and how to improve it
• Explore loan options and interest rates
• Get your pre-approval letter to start house hunting

Your pre-approval letter shows sellers you’re serious when you submit an offer on a house.

4. Decide what housing is right for you

Consider what kind of home suits your lifestyle: single-family, condo, townhome, or multi-unit property.

Then, think about amenities. Do you need a yard, or a pet-friendly neighborhood? Or maybe proximity to retail and entertainment?

Create a detailed list of must-haves. Your real estate agent will appreciate it.

5. Choose a real estate agent

A trusted agent simplifies the process of buying your first home.

They help you find homes, schedule showings, draw up contracts, and negotiate for you. Their local expertise is invaluable for avoiding bad deals and finding the right home.

Ask friends, family, or your lender for recommendations, and don’t be afraid to interview several agents before deciding.

6. Begin house hunting

Once you have a pre-approval letter, budget, and agent, it’s time to start house hunting.

Set up alerts for listings that match your criteria. If you find a home you love, act fast and work with your agent to submit an offer.

Learn more about the best cities for young adults.

Once your offer is accepted, notify your lender, schedule an inspection, and start packing. You’ll have the keys to your new home soon!

Check your eligibility and begin your application now.

Homeownership Benefits in Your 20s

There are plenty of advantages to buying a home while you’re young. Here are a few major benefits:

Build your own wealth, not your landlord’s

When you rent, your money goes toward your landlord’s mortgage, not yours. You don’t build wealth or equity in a home as a renter.

As a homeowner, every mortgage payment reduces your loan balance and potentially builds equity. That equity can often be tapped through home equity loans or a refinance at a later date.

More equity also means more profit when you sell.

Customize your house to fit your tastes

As a renter, you’re limited in how you can decorate or update your space.

Homeowners can update their home’s curb appeal, landscaping, and interior to fit their style. Major renovations, like installing a pool or tearing down walls, can also add value and build equity.

Pay off your home early

Buying a home early means you can pay it off sooner—giving you financial freedom in the future.

Once the home is paid off, your only housing costs will be real estate taxes, homeowners insurance, and any homeowners association dues, if applicable. Paying off your home also opens up opportunities for more investing, travel, or even early retirement.

What to Know When Buying A Home Young

Here are a few things to remember when buying a house in your 20s.

Upfront costs to consider

You’ll need money for a down payment (as low as 3%) and closing costs, which average 2% of your loan balance. Don’t forget moving expenses.

If you have student loans, factor those into your monthly budget. There could be relief on the way through the Transforming Student Debt to Home Equity Act.

House hunting takes time

Before you start looking, fine-tune your budget and get pre-approved. Sellers won’t consider your offer without a pre-approval letter.

Most purchases take 30-45 days to close. It can feel like a long wait, but your patience will pay off.