What Age Can You Buy A House? A Legal And Practical Look At The Question
Andrew Dehan3-minute read
September 19, 2022
In the United States, it is legal to buy a house without a co-signer at the age of majority, which is 18 years old in most states. Reaching the age of majority empowers individuals to sign legal agreements and complete real estate transactions. Before reaching the age of majority, individuals can still buy a house with the aid of a co-signer.
The practical side of buying a house young is often the more limiting factor. Read on to learn the signs of being ready to buy a house, as well as the pros and cons of owning a home.
Signs You Are Ready To Buy A House
What age you can legally buy a house is fundamentally less important than the other signs you’re ready to buy. Here are a few things you should have that show you’re ready to buy a home:
- A solid debt-to-income ratio (DTI). Your DTI is an important calculation mortgage lenders use to measure your loan eligibility. If you have student loans or credit card debts that outweigh your earnings, you may not be able to secure a mortgage.
- Income stability. A stable income is necessary to make monthly payments and pay for costs like homeowners insurance, property taxes and maintenance.
- Geographical stability. It’s best to buy a home when you know you’ll be in the area for at least a few years.
- Down payment savings. Conventional loans require a minimum of a 3% down payment and FHA loans require a minimum of 3.5%. To avoid paying private mortgage insurance (PMI), borrowers need a down payment of 20%.
- Access to extra funds. Besides saving for a down payment, you’ll also need enough cash to cover the closing costs and other home purchase fees.
- A high enough credit score. To qualify for a mortgage and an affordable interest rate, you need a good credit history showcasing how well you repay
Pros Of Buying A House Young
If you’re in the right place financially, there are several positives to buying a house young. Here are some of the key ones:
- Compounding savings. As you pay off your loan, you can build equity. A home can be a solid investment, and if it grows in value, that investment can be used as leverage for buying a new home, consolidating other debt with a refinance or paying for major life expenses.
- Life stability. Having a place you can call your own can have a huge psychological impact. Investing in a home can ground you and help you put down roots.
- Programs for first-time home buyers. Many local areas offer grants and assistance programs for first-time home buyers.
- Building credit. Paying a mortgage regularly is one of the most effective ways to build your credit.
Cons Of Buying A House Young
Along with the pros, there are some cons of buying a house young. The truth is that it’s not right for everyone. Review these cons before making a decision:
- Feeling locked in during a time of change. A lot of change can happen when you’re a young adult. While some may see owning a home as stability, others may feel it’s a trap, especially if they’re interested in moving or exploring other opportunities.
- Too much budget strain. Owning a house is expensive. If you’re strapped for cash and can’t afford monthly mortgage payments, you could consider roommates, tenancy in common or joint tenancy. However, these come with their own complications.
- Extra responsibility. Owning a house comes with a lot of responsibility in terms of maintenance compared to renting. While renters rarely have to worry about lawn care or plumbing issues, these can fall on your shoulders if you’re a homeowner.
At What Age Should You Buy A House?
In 2018, the median age of a first-time home buyer was 34, according to the National Association of REALTORS® Buyer and Seller Survey. As of the fourth quarter of 2020, the U.S. Census Bureau reports that 23.8% of people under the age of 25 owned homes. For the ages of 25 – 29, that number climbed to 34.8%. Between the ages of 30 – 34, 49.2% of people owned homes.
As the ages go up, homeownership rates climb. Whether or not people your age own homes shouldn’t be what determines if you decide to purchase one yourself. If you’re in the position financially to buy a home at a young age, you need to think about what that means for you. It may make other things less feasible, like traveling.
On the other hand, mortgages can be cheaper than rent. If you’re ready for the commitment, owning a home young can be a huge asset. Bucking the trend could put you in a great place to establish your home, which could be a powerful investment for you.
The Bottom Line
No matter your age, you should only judge whether you’re ready to begin the home buying process by your specific financial situation and the current housing market. While the minimum legal age is 18, other factors often determine whether you’re ready. Your finances need to be secure, your income stable and you should be sure you’ll be staying in the area where you’re buying the home.
Want some personal guidance? Speak with a Home Loan Expert today.
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