5 tips for millennials who want to buy a house
Hint: It involves more than giving up your latte
Adapted from a story by The Washington Post’s Jonelle Marte.
Australian millionaire Tim Gurner, 35, offered some controversial advice to millennials struggling to save for a home: Give up your avocado toast.
“When I was buying my first home, I wasn’t buying smashed avocado for 19 bucks and four coffees at $4 each,” he said on the Australian show “60 Minutes.”
The real estate mogul’s tips were not well received.
People took to social media to ridicule the idea that they were blowing their down payments on lattes and brunch. Instead, they pointed to some of their bigger — and necessary — bills as their biggest obstacles: Rent. Student loan payments. Health insurance.
Here are some tips for people trying to save a down payment for a house.
If rent’s your biggest expense, save money by moving back in with mom and dad. For other people, this may mean getting roommates.
If you live in a place with good public transportation, consider dumping your car. You’ll save money on gas, insurance, and loan payments. Also, couples with two cars may consider downsizing to one car if they can pull it off.
You could qualify for down payment assistance through your employer or your state, says Tracey Shell, a spokeswoman for DownPaymentResource.com. Some buyers will qualify for grants if they agree to live in the home for a set amount of time, such as five years. Other buyers may be able to receive low-cost loans that they can use for the down payment.
Increasing your pay can be an obvious way to find more cash to save. Ask for a raise or take on a side job.
There are benefits to providing a 20 percent down payment, but you don’t always need to provide that much money down when buying a home, Shell says.
“In a lot of markets that could mean that you’re not going to own a home for 15 years.”
For some buyers, it may make more sense to buy a home using a loan that is secured by the Federal Housing Administration. Those buyers can provide down payments of 3.5 percent, but would need to pay mortgage insurance, which could increase the overall costs of the home.