Young Latino family happily settled in their forever home, expressing contentment and stability.

Starter Home Or Forever Home: Which Is Right For You?

Feb 5, 2024



So you want to jump into the homebuying pool. The first question that comes to mind could be, “starter home or forever home?” – are you going to dip your toes into the market or dive in headfirst? Recent homebuying statistics show that first-time homebuyers made up 33% of all homebuyers in 2019.1

In the U.S., the median homeowner salary is $72,615 and renters' is $35,9622 – if those numbers are discouraging, know that there are plenty of paths to becoming a homeowner, with starter homes being the most affordable option.

There’s no clear-cut answer on which path is best, as it all depends on your personal situation and goals. We’ll explain what makes a good starter home and forever home, including their benefits and drawbacks. We’ll also help you decide whether a starter home or a forever home is right for you with a set of important questions and an interactive flowchart.

What’s A Starter Home?

A starter home is a smaller home or condominium bought as a first home. Properties typically have two bedrooms or fewer (or are a small three-bedroom). They also don’t usually have all the amenities you might want or they might be in a less-than-ideal location. This is a popular option with younger homebuyers because it’s less expensive and you can get it without waiting years to save up for a down payment.

Buying a starter home can give you the chance to save money and build home equity in a property at the same time – something you can’t do when you rent.

How Long Should You Stay In A Starter Home?

You should stay in a starter home for at least 2 years but ideally, you’d stay for 3 – 5 years. The reasons include avoiding capital gains taxes and earning money on your investment, which we’ll talk more about below.

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What’s A Forever Home?

A forever home is one that you can imagine living in for a very long time. Unlike a starter home, a forever home has everything (or almost everything) that you might want. For example, it may have a larger kitchen, more bedrooms, a backyard, easy access to public transportation – whatever you envision. Forever homes are more expensive but also have a higher resale value than starter homes.

At What Age Should You Buy Your Forever Home?

One third of homeowners ages 33 – 37 had settled into their “forever” home (most commonly a four-bedroom home) in 20183. However, there is no magic age and everyone’s situation is different. It really comes down to if you can afford a home in your ideal location and what your plans are for the future.

Starter Home Vs. Forever Home

A starter home, typically a smaller or more affordable initial property for first-time buyers.

Like many important or risky decisions, when you compare starter homes to forever homes, making a list of pros and cons is a great place to start. It’s valuable to look at the various factors in your life and use a lot of foresight when creating these lists.

But be prepared for shifts in your viewpoint once you start house hunting and better understand the state of the homebuying market. Maybe you initially thought you should be looking at starter homes, but what if you find what could be your forever home? Sometimes, when you know, you know. Right?

We’ll break down some of the benefits and drawbacks of each to help steer your homebuying search in the right direction.

Starter Houses

Starter homes are best if you’re a younger professional just getting started with your career or building a family. You might not anticipate just how quickly something like a new job, a relationship or a baby can change your housing needs when you’re young. A starter home gives you the financial flexibility you need if your situation changes, particularly if you’re still in the process of figuring things out.

Buying a starter home gives you many unique benefits, but also has some drawbacks to consider, including:


  • Lower price point: This is undoubtedly one of the most attractive features of a starter home. They’re more affordable than forever homes, which means you can buy one without waiting until you have a large down payment.
  • Lower property taxes: Typically, starter homes will have lower property taxes, which should be considered when evaluating your options.
  • Less commitment: These homes give you the opportunity to see what it’s like to be a homeowner. If you’re used to your landlord handling repairs, a starter home might give you the experience you need to learn how to manage your forever home in the future.
  • Less upkeep: They’re typically smaller than forever homes, which means they require less upkeep. You’ll also save more money when you need to heat and cool your home.
  • Saving money on furniture: Another benefit of buying a smaller home? You need fewer pieces of furniture to fill it up. This allows you to save on home decor.
  • The potential for future investment: A starter home can be a great investment property if you decide to hold onto it after you move. You can rent it out while you live in your forever home, which will add another layer of income to your finances.


  • Smaller size: They’re smaller than forever homes. A starter home might not have enough space for your needs if you plan to have children or live with family members.
  • More repairs: They often need a little work. Get an inspection before you buy and be sure you’re ready to deal with any necessary repairs.
  • More difficulty selling: Many starter homes are in less-than-ideal locations. You might have more problems selling when you finally decide to upgrade.

Forever Houses

Are you planning to settle down in a particular area? If you’re thinking about starting a family or if you’re stable in your career, investing in a forever home can be a more comfortable and financially sound option.

There are many reasons to be excited about finding your forever home, as well as some drawbacks:


  • Customize however you like: You can feel comfortable investing in features and additions that suit your lifestyle without thinking too much about their resale value.
  • Put down roots: Your family can build lasting relationships and really become a part of the community. Your children can make friends with neighbors and schoolmates without the damper of an impending move.
  • Grow into your space: Forever homes are typically bigger, so you’ll have more room for a potential growing family or for bonus spaces.
  • Less moving: Moving takes time and money, not to mention the emotional toll it could take on your children if you’re moving far or changing schools.
  • Collect bespoke pieces of furniture: Since you’re in it for the long haul, you’ll feel better investing in pieces of furniture and decor that work perfectly in your space.


  • Higher cost: A forever home will likely cost more than a starter home and could make finances feel a little tighter.
  • Greater upkeep: With a larger floor plan comes more upkeep. Along with maintenance, it will also cost more to heat and cool your home.
  • Slower ROI: If a home is move-in ready, you won’t be able to gain faster equity through remodels. Over time, it will likely gain value, just not as fast as with sweat equity.

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How To Choose The Best Option: 8 Questions To Ask Yourself

Couple discussing real estate with their real estate agent

There are a ton of factors to consider when evaluating your home buying options, including affordability, your future plans and timeline, home location and condition. We’ve included some crucial questions to ask yourself below – for tailored advice, speak to your financial advisor or one of our Home Loan Experts.

1. How Much Home Can I Afford?

Do you know how much home you can afford? A good place to start your research is by getting a mortgage preapproval. A preapproval is a preliminary approval from a mortgage lender that tells you how much of a loan you’ll qualify for. Mortgage preapproval allows you to narrow your home search and gives you a more realistic expectation on what you can afford.

Before you start viewing homes, get a preapproval and then start shopping below your limit. There are also home buying assistance options available for a variety of situations, like:

Another great resource for potential home buyers is our home affordability calculator.

2. How Much Home Do I Need? 

One mistake that starter home shoppers make is buying as much home as they can. You might think that if you can get mortgage approval for a $200,000 home, why not take out $200,000? The point of buying a starter home is to save money and eventually move into the home of your dreams.

Think about your lifestyle and your goals. Are you attached to having outdoor living spaces? Do you need a pet-friendly home with room for your pets to roam? You might find yourself compromising on certain factors, like indoor space for other features that best fit your needs.

Above all else, focus on affordability and living below your means. Otherwise, you might find yourself stuck in your starter home for many more years than you’d like.

3. How Long Do I Plan On Staying In This Home?

Not only would it be a pain to move too soon after buying a new home, but it could also hurt your wallet. Selling your home can be expensive and if you haven’t stayed long enough to build equity in your home, you could end up only breaking even or losing money after all of the fees and expenses that come with selling your home (for example, REALTOR® fees).

If you move out before you’ve lived there for 2 years, you could also be subject to capital gains taxes. If you can’t guarantee that you’ll want to live in the property for more than 2 years (ideally, at least 5 years), then you should reconsider purchasing a home.

Some reasons that could cause you to move include:

  • Getting a new job or having a job that could cause you to relocate
  • Changes in your marital status or relationship
  • Starting a family or expanding your family
  • To support or care for other members of your family

If you think any of these could apply to you, you should strongly consider them in your decision of whether or not to buy a home.

4. Does This Location Suit My Needs And Future?

Consider the location of a home before you buy. You might not need to worry about things like school districts or local parks if you’re looking at starter homes. However, you should think about how far the home is from your job. Even if a property has the right price, a lengthy commute might be a major drawback.

Map out your commute or do a “test drive” to estimate how much time you’ll spend on the road every day. You might need to start over and look for a home that’s a little closer but has fewer amenities.

Since many of us work from home these days, you should still consider distance from family and friends as well as amenities and activities. Will this location suit you in the long run or for at least 5 years?

Cute small starter home.

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5. What Is The Condition Of This Property?

Make sure you get both a home inspection and an appraisal before you sign on your mortgage. (Most of the time, lenders require an appraisal.) An appraiser assesses the fair market value of a home, or in other words, tells you how much the home is worth. What an appraiser won’t do is tell you which outlets aren’t working or if your stair railing needs to be replaced. That only happens during an inspection.

Get an inspection before you invest in the home. During an inspection, an expert takes a walk through your home and lists everything that needs to be replaced or repaired.

6. Do I Have The Means To Take On Renovations?

Once you have an idea of the scope of the renovations a property will require, think about if you have the means to complete them. This includes the time in your day-to-day schedule, the funds needed and the overall timeline you’d like to complete them by.

There are financial options if you want to upgrade your home down the road, like refinancing for renovations. But some renovations can’t wait, like structural issues or things that could affect your health, like asbestos or mold. This should all be taken into account when evaluating your options.

  • Which home improvements can wait, and which are urgent fixes?
  • Do you have the means to take on the urgent issues and do you have a plan to tackle the others down the road?

7. How Much Will The Home Actually Cost?

Aside from the cost of necessary renovations you should also consider the additional costs that some home buyers frequently overlook. Some of those costs include:

  • Renovations: Are you prepared if they go over budget or take longer than expected?
  • Mortgage rate: Your mortgage rate will have an impact on your costs over the years.
  • Home insurance: Notably more expensive than renters insurance – depending on your situation, you might also need private mortgage insurance.
  • Interior upkeep: Without a landlord to call for fixes, are you prepared to pay for things like appliance repairs, replacing flooring, furnishing a larger or different space, and keeping up with utility fees?
  • Exterior upkeep: This could include landscaping, paint, siding, leaf and snow removal, etc.
  • Moving costs: Will you have to hire moving assistance, take time off work or hire a babysitter?
  • Home buying fees: Special taxes, real estate fees, closing costs, etc.

Please note that additional costs will likely apply to your situation. When you sit down to figure out the cost of a property, you should try to calculate every “hidden” cost as well. This mortgage calculator is a great place to start. Once you have the final estimate, it’s wise to inflate the number a bit to give yourself budgetary wiggle room.

8. Is The Home Value Going To Appreciate?

In the same way that a home should be affordable, it should also be seen as an investment that will build value over time. Property is one of the most important ways to build wealth and the lack of equitable real estate investing is a big cause of the women’s housing gap and other wealth disparities.

Some good indicators of potential home value growth include:

  • Increasing job market
  • Decreasing or low unemployment
  • Good school districts
  • Opening of businesses in the area
  • Development projects

Most importantly, you should look at historical home buying data. Look at average home prices over the years and seek out trends in that data – hopefully, those trends go up and to the right. 

Get approved to see what you can afford.

Rocket Mortgage® lets you do it all online.

Starter Home Or Forever Home Flowchart

Couple sitting on a couch looking at a laptop.

So, which type of home is right for you? Let’s take a closer look at when buying a starter home makes sense and when it doesn’t.

When Buying A Starter Home Works

Starter homes work for people who aren’t necessarily ready to settle down but feel ready to become a homebuyer. Starter homes work as a great test run to see how well you maintain the home before trying to take on maintaining a larger property. Starter homes also work if you just don’t need the space yet, which harkens the question, “how much house do you need?” It’s not always wise to purchase a large home just because you can.

You can also build equity in a starter home. You can sell your home or rent it out if you have the money to upgrade later on – two things you can’t do when you rent. Not sure what your future holds? It might be a wise choice to go with a starter home.

When Buying A Forever Home Works

Do you want to settle down in a particular area? Forever homes are larger, more expensive and have more amenities. If you’re thinking about starting a family or if you’re stable in your career, investing in a forever home can be a more comfortable and financially sound option.

Still not sure? Check out the flowchart below to get a better idea based on your particular situation.

Starter or Forever Home Infographic

A starter home is an affordable piece of property that’s meant to be an entry-level home. They’re typically smaller than other homes and have fewer amenities. They often need more TLC than forever homes.

Forever homes are best for adults who know they want to stay in a particular area for a long time, who are stable in their career or who would like to start a family. Remember that later in life many seniors choose to downsize, so your “forever home” doesn’t have to mean “forever” if that’s not what you’re looking for in the long run.

Whatever you decide to buy, you'll need mortgage preapproval to get the most realistic picture of your loan prospects. Get preapproved now so you can weigh your options.

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Miranda Crace

Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years. Miranda is dedicated to advancing financial literacy and empowering individuals to achieve their financial and homeownership goals. She graduated from Wayne State University where she studied PR Writing, Film Production, and Film Editing. Her creative talents shine through her contributions to the popular video series "Home Lore" and "The Red Desk," which were nominated for the prestigious Shorty Awards. In her spare time, Miranda enjoys traveling, actively engages in the entrepreneurial community, and savors a perfectly brewed cup of coffee.