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How to afford buying a house, from people who actually did it

Buying a home, while it was a regular part of adulting a few generations ago, is an alien concept to a lot of millennials. It's also one of the biggest financial decisions you'll ever make. Since the costs of owning a home can extend well beyond the final selling price — think taxes, repairs, inspection fees, and interest — buying a house might feel unattainable. Still, you don't have to nix the idea of pursuing your dream home because affording a house is possible for many people. It'll just might require some time, sacrifice, and strategic planning.

Although you might believe that you need to put a major amount down to buy a house, that's actually not always the case. There are many options available for first-time homebuyers with little savings, including the Federal Housing Association (FHA), which offers mortgage insurance on loans as low as 3.5 percent of a down payment from FHA-approved lenders to people who qualify as having a debt-to-income ratio greater than 43%. These loans can cover up to 10% of a down payment.

Even more, especially if you're not trying to buy in a big city, the price of the home you want might not be as bad as you expect. The Washington Post calls the current real estate climate as a "buyer's market," which means you can have the upper hand in negotiating closing prices since the supply of properties is greater than the demand. Research from real estate database Trulia also found that across the board, homes are taking longer to sell, which is due to natural fluctuations in the market, according to The Wall Street Journal. So owners are slashing prices on their houses even before negotiations begin.

If you're thinking about buying, now's a great time, even if the financial commitment scares you. And don't forget, owning a home is meant to not just be a one-time purchase, but an investment that can often pay off down the line. Having your own property can "increase your personal wealth as you pay off the principal on your loan over time and build equity,” AJ Barkley, SVP, neighborhood lending executive at Bank of America, tells Mic.

Still not convinced buying is doable for you? Here's how to work towards that future goal, according to young adults who managed to afford their first houses despite the challenge.

Save money in whatever way works for you

For Daniel Herz, a commercial lighting specialist at Concept Illumination, the struggle of living with roommates made him badly want to buy a house. But because his job as a small business owner meant that income didn't come in on a regular basis, he couldn't put away a few hundred bucks every month to slowly save money over time, like many people do. Instead, once Herz got paid for four major deals, he used that as his cue to start house hunting. “It was just a one-shot lump sum," he tells Mic.

Herz's finance method may not have been typical (and it certainly isn't generally an option for people who work for someone else), but it fit his situation. It shows that there's no right or wrong way to save money if it leads you to eventually reach your goal and feel pride that you did it, as was the case for Herz. “For once, after not spending a penny on myself, I took the profit and invested it in myself," he says now.

Launch a side hustle

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If your full-time job isn't adding enough to your savings, consider taking on a lucrative project on the side. For Brody Hewitt, who works in construction, his second job as a landlord not only helped him and his partner live rent-free before buying a house, but also generated them extra income off tenants’ rent.

“We were lucky enough to have rental properties that went up in value while we were living in one unit," Hewitt tells Mic. "We refinanced them to pull out our down payment and used my partners’ salary as an indicator of how much we can spend monthly on a mortgage without changing our lifestyle."

Don't feel ashamed to move back home

Not everyone has the ability to move back in with their parents if needed, but if you're able to, don't feel embarrassed — there’s nothing wrong with squeezing out as much use of your childhood bedroom as possible if it allows you to save money for the future.

Before moving into a house with her now-husband, building manager Elizabeth Tomaras moved back home while her partner rented an apartment. The freedom of not paying rent not only helped her save up for a down payment, but allowed her to avoid having to make other big adjustments to her spending habits.

“We didn’t do much in terms of changing lifestyles,” Tomaras recalls to Mic. “Maybe we dined out a bit less to have more cash in our pockets, but no major overhaul.”

Pay off student loans at a slower rate

If you still owe thousands of dollars in student loans, buying a home might seem like a pipe dream, but it doesn't have to be. When Lina Abascal, a creative consultant and writer, realized she was allocating a significant portion of her earnings towards paying off loans because she wanted to close that chapter of her life as soon as possible, she realized she could scale back.

“I made [paying off student loans] less of a priority because I wanted to have cash available... I’d rather have $20,000 left in loan debt and $20,000 cash ready if the perfect house came,” she tells Mic.

In addition to re-financing her loans, Abascal also jumped from one nine-to-five job to another in search of the highest salary, and supplemented her income with 20 hours of freelance work per week. A few nights a month or whenever she went traveling, she would rent out her apartment on Airbnb, often breaking even. “It felt like free money,” she says.

Take advantage of payment assistance programs

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For Khadija Houston, a probation agent, the upfront cost of a down payment made the prospect buying a house initially seem unlikely. “A lot of realtors were telling me to have obnoxious down payments available and I knew that would not be feasible for me,” she tells Mic.

So instead of plopping down a ton of money at once, Houston found a government program that assisted with down payments and closing costs for people in certain income brackets. The program, run through the Michigan State Housing Development Authority, gave her $15,000, and by making some lifestyle changes (fewer manicures, more staycations), she was able to save an estimated $5,000 on top of that amount.

Even now, having bought the house, she still finds ways to smartly save. “My mortgage is paid monthly and I am paid bi-weekly. I take half of the mortgage payment from each check per month and place it into a separate account until the payment is due,” Houston explains.

Shop in up-and-coming neighborhoods

When Devon Horace, a branding management consultant, was thinking about getting a house, he focused on "buying in a friendly up-and-coming neighborhood," he tells Mic.

It's a good strategy; under-the-radar areas tend to not only be quieter than super popular locations, but their houses often cost a lot less than those located in hotter spots. Plus, since real estate trends are constantly in flux, your home might end up actually increasing in value by the time you’re ready to sell. Keep in mind, though, the existing culture of the community that'll be joining and how to be a valuable member of it to avoid coming across as unaware and insensitive.

In addition to looking up neighborhoods, Horace also gained insight into what type of mortgage he could afford by listening to real estate podcasts and reading articles by money advisors. Eventually, he decided to put down 20 percent of the down payment, in order to avoid paying the private insurance on top of the mortgage, “which, by the way, does nothing to the principle or the amount of the loan. It’s an extra fee,” he notes.

Buying a home requires extensive research, saving, and (let's be real) soul searching, but as these stories show, it can be done.