How Your Starter Home Can Help You Purchase Your Dream Home

Blog posted On April 17, 2025

Does your dream home seem like a faraway vision, those 4 bedrooms, 3 baths, and white picket fences flickering like a mirage in the distant setting sun? Instead of wiling away the next few years, skimping and saving while paying for someone else’s mortgage, why don’t you buy a more affordable starter home now? You can use the equity you build to pay for the down payment on your dream home in 2-5 years. This is a strategy that many savvy first-time home buyers use when encountering affordability barriers. We encourage you to tackle homeownership with efficiency and want to ditch this misconception that homeownership has to be this impossible dream and that you’re stuck living as a renter for a decade or longer!

The Benefits of Buying a Starter Home

While you won’t immediately be jumping into luxury homeownership with a starter home, you’ll instead reap the long-term benefits of living in a humble abode as your starting point. Embarking on homeowning sooner will offer numerous dividends down the road.

Start Building Equity

• Equity refers to the ownership stake you have in a property — essentially the difference between your home’s current market value and the remaining mortgage balance. So with every mortgage payment you make, you’re building more equity that you can use for your next home

Customization

• For renters, you likely can’t make alterations to your living space or are at least very limited on your customization options. As a homeowner, you can personalize to your specific preferences, so feel free to repaint to your heart’s desire!

Typically Lower Expenses

• A home with less square footage typically means that the upkeep is both easier and cheaper. If you live in a single-story home, there’s also less space to clean and less furniture that you feel obligated to buy and fill the rooms with

Tax Deductions*

• Homeowners can take advantage of tax breaks on their yearly return, which includes the amount paid toward their mortgage interest, reducing their taxable income

*For tax advice, please consult a tax professional. 

Turn Your Starter Home Into an Investment

• This is moreso in line with long-term planning once you’ve saved up enough to buy your dream home, but you could potentially keep your starter home and use it as an investment, renting it out to occupants. Not all homeowners want to become landlords, but if you could see that as a potential option for you, it’s another income avenue to consider

Running Into Affordability Barriers?

Good news! If you can’t afford the typical 20% down payment right off the bat, look no further than down payment assistance (DPA) programs.

Local DPA Programs

• You can work with your loan officers to research down payment assistance programs that are specific to your city or region. Whether you live in Washington State or Florida, we can help you narrow down the right DPA option, coast to coast!

Low-to-No Down Payment Options

• VA Loans – For Veterans, VA Loans offer a zero down payment option for home financing, alongside other perks
• USDA Loans – The U.S. Department of Agriculture offers 100% financing available for designated rural and suburban areas, designed to help low-to-moderate-income families achieve homeownership

HomeFundIt™

• Down payment assistance reinvented, through community gifting!
• Achieve homeownership with the help of your friends and family
• A unique gifting platform to help raise funds for your down payment and closing costs

If that vision of homeownership is finally starting to solidify, leave that mirage behind! We can help turn fiction into fact, so ditch the days of rental woes and dive into homeownership with the help of a starter home.

Source: Homes.com