For many people, buying a house is the most expensive purchase they will ever make. While there are plenty of government programs to help defray the cost of buying a home, the fact still remains – buying a home isn’t cheap.
The good news is, even someone with a modest salary can buy a home if they’re willing to sacrifice and save. Let’s explore some of the possibilities that make homeownership a possibility for just about anyone.
Most buyers will seek financing when they buy a home. Some financing options, like a VA loan, let you purchase a home with no money down, but you’ll almost always be responsible for paying closing costs.
Closing costs can be anywhere from 2-6 percent of the loan amount, and they cover things like origination fees, insurance, and the like. You can try to save money on the closing costs by asking the seller to pay all or part of this required upfront cost.
More than likely, you won’t be able to buy your dream home with your first home purchase. You’ll need to work your way into it. For your first home, however, start small and cheap. Consider a fixer-upper that you can get for below market value and then fix it up to sell for a profit. This is how you’ll be able to work your way up into the home of your dreams.
The American tax code favors homeowners. Whether it’s your primary residence or an investment property, you are eligible for certain tax breaks that could make any profit you earn from your real estate dealings non-taxable or tax-deductible.
For example, the interest and taxes you pay on your primary residence are both tax-deductible. If you own an investment property – even if you make a profit off it – because of depreciation, it shows as a loss on your taxes. Furthermore, if you live in the property for at least two years out of five, when you sell it, you won’t have to pay any capital gains taxes.
Now, Buy a Bigger, More Expensive Home
After selling your first home and making a profit from it (plus any money you have saved), you can now use that as a down payment on a bigger, more expensive home – buying below market value again, of course. You’ll make the necessary repairs and upgrades, then sell this home to buy an even bigger, better home once again. You can repeat this process as many times as you want until you can afford your dream home.