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Starter Home Vs. Forever Home: Which Is Right For You?

5-minute read

September 17, 2020


Think you’re ready to make the jump from renting to owning a home? A starter home can help you on the path to homeownership without putting a serious dent in your finances.

We’ll explain what makes a good starter home, their benefits and drawbacks, and we’ll also help you decide whether a starter home or a “forever home” is right for you.

Overview: What’s A Starter Home And A Forever Home?

As the name suggests, a starter home is a smaller home or condominium bought as a first home. They don’t usually have all the amenities you might want or they might be in a sub-prime location. They’re popular with younger home buyers because they’re less expensive and you can buy them without waiting years to save up for a down payment.

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

Meanwhile, a forever home is a home 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 in a home. For example, your forever home might 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.

Things To Look For When Buying A House

Think you’re ready to start shopping? It’s a good idea to know what you’re looking for. Here are a few key things you should consider when you begin your hunt for the right house.

Affordability Above Everything

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. 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.

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.

Consider The Condition

The term “starter home” is often synonymous with “fixer-upper.” You might jump at the chance to buy a property way below market rate if you’re on a tight budget, but consider what might happen if you don’t have enough cash to cover expensive repairs later on.

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.

Make sure you get both an 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.

Think About Your Location

Consider the location of a home before you buy. You might not 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.

Benefits And Drawbacks Of Buying A Starter Home

Buying a starter home gives you many unique benefits, including:

  • A lower price point: No doubt, one of the most attractive features is its lower price. Starter homes are more affordable than forever homes, which means you can buy one without waiting until you have a large down payment.
  • 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.

Drawbacks Of Buying A Starter Home

Starter homes definitely aren’t for everyone. Let’s take a look at some of their drawbacks:

  • 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 needed repairs.
  • More difficulty selling: Many starter homes are in less-than-ideal locations. You might have more problems selling it when you finally decide to upgrade.

Starter Home Vs. Forever Home: Which Is Best?

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 A Starter Home Works

Starter homes are best if you’re a younger professional just getting started with your career and 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.

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 A Forever Home Works

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.


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. A major benefit is that they allow young professionals to start on the path to equity and homeownership without needing to take years to save up for a down payment.

They typically offer a lower price point, less commitment and upkeep, furniture savings and the potential for a future investment. Starter homes do have some drawbacks, too. They’re often a smaller size, require more repairs and it’s possible that they could be more difficult to sell later on.

On the other hand, forever homes are larger, more expensive and have more amenities. They’re 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.

Consider the pros and cons of each type of home and reach out to the Home Loan Experts at Rocket Mortgage® when you’re ready to take the next step.

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