I’ve never thought of myself as the most financially practical person. I picked my major in college because I liked reading and writing, not because I had any plans to get a JOB with that English degree. I spent several months working at a costume shop for minimum wage because I like playing with velvet, and my career ambitions were all pretty nebulous and fantastic. I had no idea what I wanted to do when I grew up.
Even so, I first started thinking about getting a house shortly after I got out of college. I was working as a waitress and making a living wage, and I was lucky enough to have graduated with a manageable amount of debt. I started researching the process, and I got some crushing news: although I had over two years of employment history, the variability of my income meant I qualified for an extremely small loan amount. I put my dream on the back burner. After a few months, I got a more stable job here at Simple, and the house idea kept creeping back into my head.
The challenges of buying a house as a single person
I’ve got to say that buying a house when you’re single is pretty tricky. I went to several classes at the Portland Housing Center (more on them in a second), and every time, I’d look around the room and see nothing but couples. I felt a bit lonely. Plus, getting a loan with one modest income is hard—it’s way easier to qualify with two incomes. It’s also harder to save up for a down payment, harder to make time to look at properties, and it’s really daunting to think about moving and fixing up the new place alone.
But I did it (with Simple’s help) and you can too! Here’s what you need to know, from someone who made it to the other side.
Start with your dreams
Pull back. Way back. Think long and hard about the life you want to live. Then take a look at your situation and decide if owning a house is going to get you closer to that life or not. For most people, the biggest financial decisions are also life decisions, so the financial repercussions are usually not the most important ones. What makes the most sense financially may not make the most sense emotionally, and that’s okay!
Ask yourself: does this city feel like home? Do I want to travel and move around, or do I need stability? Do I want my home to fit a pet, a partner, a family? What is it about owning a house that appeals most to me, and is there another way I could get that? What are my other financial goals, and how does owning a home impact them?
Begin looking at your resources
Start by doing research and getting advice. I went straight to the Portland Housing Center, which is a local non-profit that offers loans, homebuyer education, credit counseling, and other homebuying resources. There’s probably a similar organization near you—take a look around! (The US Department of Housing and Urban Development maintains a great list on their website.) With their help, I learned that paying off my student loans and saving up for a substantial down payment would dramatically increase my price range.
It’s also a good idea to spend extra time saving up. A solid down payment (at least 5%, and ideally 20%) will make your mortgage payment much more manageable. This article from US News explains how a larger down payment can save you a ton of money in the long run. It’s also essential to have an emergency fund and a little extra for random repairs and the move. These things are important for all homebuyers, but they’re especially important for single buyers. Of course, saving that much money on one income is hard too. Luckily I like challenges and I’m stubborn as they come, so I kept saving, kept looking at properties, and I researched all the programs for which I qualified.
Then shop around for a lender and a realtor you trust. I talked to four lenders, and the amount of the loans and the interest rates each offered varied a lot! Consulting several lenders can save you money on interest and also increase your buying power.
When you’re choosing a realtor, look for someone who has worked with first-time buyers before. Ask them if they have experience in your price range. This step is especially crucial for a single person. There are a lot fewer homes that are scaled and priced for a single’s budget, so you can expect to spend more time looking and negotiating, especially in a fast-moving market. You need an experienced, patient realtor who is on your side. The author on her new back porch.
Budget with your goals in mind
Once I decided that owning a house was right for me and I had an idea how much I needed to save, I had a guiding force for my budgeting. Everything else fell into place. If you’re working towards a goal that you’re really excited about, saving is more rewarding than anything you can buy.
So I decided to save 20% of my income—this seemed ambitious but doable. Every pay period, I put aside part of my paycheck and I lived on the rest. To accomplish this, I largely kept the lifestyle of the penniless student I had been a few years earlier with a little extra wiggle room so I could enjoy my life. I was happy to forgo a larger apartment or a new car because I had a ton of bigger plans.
I used Simple’s Goals to set up a basic budget for my living expenses, and I used Reports to see where my money was going and where I could pare down. For example, after looking at my total paycheck and my necessary fixed expenses, I decided that I could spend $100 a week on entertainment and little luxuries while staying within my budget. I picked activities that would help me stay within that budget, and when I ran out of money, I stopped buying fancy coffee and going to the movies until my next paycheck.
As I mentioned earlier, I learned that paying off debt was a wise first step, so I paid off my student loans and credit card bills that had crept up on me. Although it meant I had to take more time to save for my ultimate goal of a house down payment, it meant that I had less debt when I went to apply for a loan. This allowed me to get a better rate and a larger loan, because my credit scores were higher and my debt to income ratio was great. Check out this affordability calculator that shows the math in action.
Here are my favorite savings tricks:
Savings come first! Put aside the amount you’d like to save before you even think about the rest of your budget.
Firmly separate your savings from the rest of your money. Put savings in a Goal or a separate account. Just don’t mix them with your day-to-day spending money.
Count up what you’ve saved every once in a while for the sake of motivation. Watching your progress towards a meaningful goal will make up for the times you had to pass up buying something that you wanted.
Budgeting with Simple kept me on track to save what I needed. At the same time, a lot of the guilt I had about occasionally spending money on fun little luxuries dissipated, because I’d planned for them. I finally had a lifestyle that was balanced, effortless, and enjoyable.
Build a support system
Saving up for a house is only part of the battle. Buying a house is really stressful, and it takes a lot of patience and endurance. While you’re searching, you may wonder if you’ll ever find a place in your price range. You might worry about fixing and maintaining your new house. You might doubt your ability to negotiate a fair deal. I worried about all these things and more. The anxiety of buying a home can be just as challenging as the budget, so it’s important to have a plan for managing it, too.
Find people you trust to help you throughout the homebuying process. My loan officer, Ralph, was always ahead of the game. He managed to crank up my price range and crank down my payments by getting me a phenomenal interest rate. My realtor, Gary, had the patience of a saint, and he helped me keep looking until we found the right place for me.
Reach out to your family and friends, too. One of the hardest parts of buying a house as a single person is making such a momentous choice by yourself. Although the choice is yours, you don’t have to do it alone. It’s really important to have someone you love and trust to brainstorm with and talk to.
Reach your destination
There are so many factors that go into finding a home. Money is a huge part of it, and it’s really hard to figure out how to balance your financial constraints with all the other dreams you have for your home, plus the plans you have for other aspects of your life. Using Simple definitely helped me save for my house, but I think its biggest contribution to the process was the unshakable confidence in my budget that it gave me. Once I had that, I knew I could do it … and all I had to do was make it happen.
Steps to buying your first house
- Improve your credit score
- Decide on a budget for your home
- Arrange a down payment and associated costs
- Have enough money in your savings account to cover unforeseen expenses associated with buying a home
- Talk to a mortgage professional
- Find a realtor
- Find a home you'd like to buy
- Buy your first home!
Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner banks, The Bancorp Bank and BBVA Compass, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.