Buying a home is, of course, a complicated process. You need to prove to the bank and real estate agent that you can afford the repayments. While homebuying is usually reserved for those who finished school and are currently employed, people under 20 years old can also get into the dream of owning a property. Yes, it’s possible as long as you set yourself up for it.
The advantage of applying for an FHA loan when you’re 19 is you have plenty of time to pay for the loan. You can even for a 30-year fixed-term loan since you’re only in your 20s. Sure, the interest might be a little stiff, but you won’t notice that due to the inflation rate. As time goes by, your income will increase and the monthly payments you’re making for a home loan will not be that impactful on your budget anymore.
Time is of the essence when it comes to affording a home. Imagine buying a home when you’re 35. The only way you can finish paying off the property is if you take a 15-year fixed term. But that also means you’ll be paying a higher monthly amortization while also sending your kids to school. Getting on the homebuying train early will allow you to finish earlier, too.
Qualifying for a Loan
You must be working for at least two years to be eligible for a loan. During those two years, keep your credit score between 500 and 579 or aim for a FICO score of 580 or higher. The bank will require that you make a down payment of 3.5% so make sure that you save enough money for that.
Work double if you can and reduce your expenses. To get loan approval, the bank will look at more than your credit score. It will look at your spending habits, too. The more irresponsible you are (such as not paying the rent on time), the less likely a lender will look at you kindly.
Remember that you are young. Most lenders will use that against you. Why would they trust a 19-year-old to repay a loan when they think all you do is party at night? Proving that you are eligible for the home loan will be tougher than getting a passing grade in your calculus exam.
Know What You Are Getting Into
It sounds exciting and fun and responsible to want to own a home in your teens. But remember that this is a responsibility you are going to answer for in the next 30 years or so. How committed are you to this dream? How much do you want it? You need to recognize what you are getting into, and how it can hamper all the other plans you have lined up for yourself such as going to college or even starting your own business.
It’s nice that younger people want to make their dreams of owning a home come true as soon as they’re in high school. It’s nice to see them work hard for those dreams. You have to prepare yourself for this kind of responsibility. You also have to push yourself harder than most of your peers.