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Guide to Starter Homes: A Complete Checklist for First-Time Buyers

Starter homes are often townhomes, single-family houses, or condominium units that are on the lower end of the housing price range. Although they are smaller and have fewer amenities compared to a forever home, starter houses are easier to acquire since they require a smaller down payment.So if you’re tired of renting, buying a starter home is a quick route to homeownership. Additionally, you have multiple loan programs available to you if you’re a first-time buyer, which alleviates the financial burden of buying a new home.Finding the perfect starter home, however, involves many considerations and decisions. If you’re planning to buy your first house, check out this guide for things you should consider when buying a starter home.

1. Location

The location of the property affects two things: accessibility and the housing market. Let’s first look at accessibility.


Of course, you want a house that’s near your work, grocery stores, hospitals, and other necessary services. Being close to these establishments makes your day-to-day routine and dealing with emergencies easier.Another factor of accessibility is transportation. Does the location have a decent public transportation system? If it doesn’t, you might need to buy a car to get around the area, especially if you go outside the city frequently. You have to account for that cost on top of your home buying expenses.

Local Housing Market

You need to consider the location’s real estate market. Aside from home prices, make sure to ask your real estate agent about the competition because a property’s selling price isn’t always the price you’ll end up payingWhen several buyers are interested in a house, they can start bidding wars and drive the price out of the range of first-time buyers. If you’re eyeing a property in a hot market, you need to be prepared to pay more than its going price.You don’t want to buy in a slow market either, though. Remember that you’re buying a starter home; it’s likely that you’ll move out of it eventually. Prices are always going up in hot housing markets, which means you can make a good profit on the house if you do decide to sell in the future.If the housing market isn’t strong, however, then there’s a high chance that the property will depreciate, meaning you won’t earn that much or anything at all from the sale.You should also inquire about the mortgage interest rates in the location. A volatile interest rate market might force you to pay more than you expected or budgeted for.

2. Financing Options

After the location, you also need to look at your financing options, meaning available loan programs and any perks offered by the seller.

Federal and State Loan Programs

Search for loan programs you’re eligible for if you’re a first-time home buyer. Federal government agencies like the Federal Housing Administration and U.S. Department of Agriculture offer programs and grants for first-time buyers, provided that you meet their criteria for eligibility.The government-sponsored enterprise Fannie Mae also offers a financial program for first-time home buyers. Its HomePath Ready Buyer program provides a three percent closing cost assistance for foreclosed Fannie Mae properties. You only need to complete the required educational course.Aside from federal loan programs, state governments also offer their own loan schemes for first-time home buyers. This is another reason to think twice about the location you’re buying a property in.Kansas, for example, has the First Time Homebuyer Program. It provides a loan of 15 to 20 percent of the property’s purchase price to help you with your down payment and closing costs.You don’t need to have a high credit score to qualify for this Kansas Housing program, but you do need to meet the income requirements. You can learn more about the income condition here.

Seller Concessions

Other than loan programs, you also want to consider seller concessions. Seller concessions are when the seller pays a part of your closing costs, which usually contribute two to five percent of a property’s purchase price. The seller may be able to cover some or all these closing costs:

  • Title insurance
  • Property taxes
  • Inspection fees
  • Appraisal fees
  • Loan origination fees
  • Recording fees
  • Attorney’s fees

You won’t receive the funds in cash, though. The seller often pays these fees by taking the amount from the sale. For example, if they received $100,000 from the sale but agreed to pay $2,000 in concessions, then they’ll only take $98,000.Concessions are often made by sellers who want their houses sold fast. They’re also commonly offered for properties that have been on the market for too long, which is a common case for slow housing markets.


3. Home Features

Again, starter homes generally have fewer amenities compared to forever homes, but this doesn’t mean you can’t be selective about the property you’re getting. Determine your non-negotiables and where you can be flexible beforehand to make the process easier on you.For example, outdoor amenities like a garage or a fully landscaped lawn are easier to let go of compared to indoor features, such as a downstairs bathroom or built-in storage. You can always build a garage or do your own landscaping, but it’s more difficult and more expensive to have a new bathroom constructed.Here’s a tip: a home’s exterior is generally easier and cheaper to fix than the interior, so this is where you can make wise concessions.If you’re planning to acquire a home at the lowest possible price, consider looking at fixer-uppers or homes that require repairs. These sell at much lower prices than houses that have been repaired and staged before the sale. The best thing about fixer-uppers is that you can turn them into properties that can eventually be sold at a much higher value.Note, however, that some repair issues are harder and more expensive than others. Cosmetic problems are forgivable but make sure to avoid homes with structural issues.Avoid fixer-uppers if they require you to do the following expensive repairs:

  • HVAC system replacement
  • Roof replacement
  • Water damage repair
  • Electrical rewiring
  • Window replacement
  • Complete bathroom or kitchen remodels
  • Plumbing line replacement
  • Mold removal
  • Termite damage repair
  • Foundation repair

4. Sellability

If you’re only planning to live in your starter home for a handful of years, then you should think about how well the property would sell once you’re ready to let go of it. Some factors that influence a home’s value are location, interest rates, the housing market, and the property’s condition and features.As we’ve mentioned before, properties in hot markets have high chances of appreciating after several years. If you can afford a house in a booming market, then you should grab the opportunity to invest in a real estate property in that location. This investment can yield a high return, which you can use to finance your forever home.You can also slowly increase your property value by working on its curb appeal, updating its interiors, and adding some smart technology upgrades. Among these three, improving your curb appeal is the easiest and most affordable option since there are many home exterior improvements that don’t cost much but yield a high ROI. In fact, a good curb appeal can increase your property value up to seven percent.You can have the lawn landscaped, the front door repainted, the sidings replaced, and smart outdoor lights installed. These are features that many home buyers look for in houses, making your property more attractive.If your starter home isn’t easy to sell, you can rent it out instead. This is a wise idea because it gives you a second source of income, which you can use to pay your mortgages for your forever home.

5. Personal Goals and Timeline

Finally, consider your long-term plans. These have a huge impact on the home you’ll purchase, even if you won’t be living in that house forever.For instance, if you have little kids or are planning to have kids soon, then you should look at properties that are near schools. It also helps if you get a starter home in the same area where you wish to get a forever home someday. That way, your kids wouldn’t have to deal with the emotional turmoil of changing schools and moving far away from their friends.The bottom line is that even though you won’t be living in your starter home forever, it should still help you achieve your long-term plans at your ideal pace, whether those are professional or personal goals.

Buying Your Starter Home

In some ways, choosing a starter home is more challenging than buying your forever home. Since you don’t see yourself living in the house for the rest of your life, you need to have an exit strategy for when you’re ready to move. The last thing you want is to be stuck with a property when you’re already planning the next phase of your life.As such, make sure to seek the advice of a realtor when buying your first real estate property. They’ll help you find a house that suits your current needs and goals but will be profitable and easy to sell once you’re ready to buy your forever home.If you need help navigating the real estate market, Cami Jones Collaborative is here. Our boutique-style service gives you a personalized experience, making sure that you have the undivided attention of one of our real estate agents. You can utilize our team’s advanced market research strategies and expert negotiation skills to find your ideal starter home.Ready to buy your first-ever home? Call us at (913) 521-5584 or fill out our online form to book an appointment today.

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