Starter Home Or Forever Home: Which Is Right For You?
Author:
Miranda CraceOct 16, 2024
•6-minute read
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.