You Might Be Closer to Owning a Home Than You Think

If you’re renting right now, you may have had the same thought a lot of first-time homebuyers have:

“I’d love to own a home, but I just don’t think I’m ready yet.”

Maybe you don’t have 20% saved for a down payment. Maybe you’re worried about the monthly payment. Maybe you’re thinking, “With interest rates where they are, wouldn’t I be better off just renting for a while?”

Those are good questions—and you deserve real answers.

The truth is, buying a home may be more attainable than you think. You don’t necessarily need a huge down payment, and you don’t have to wait for the “perfect” market to start building toward homeownership.

Let’s look at what buying a $340,000 home could actually look like.

1. What happens if I don’t have 20% down?

This is probably one of the biggest myths keeping first-time buyers on the sidelines.

You do NOT necessarily need 20% down to buy a home.

Depending on your loan program, credit, income and other qualifications, you may be able to purchase with as little as 3% down on some conventional loans. FHA financing can require as little as 3.5% down for qualified borrowers.

So what does that look like on a $340,000 home?

Look at that first number again:

3% down on a $340,000 home is $10,200—not $68,000.

Of course, your actual loan requirements will depend on your specific situation, and you’ll also need to account for closing costs and other upfront expenses. But the idea that you have to save $68,000 before you can even start the conversation may be keeping you from exploring your options.

And sometimes there are builder incentives, lender credits or down-payment assistance programs that can help reduce the cash you need to bring to closing.

**The first step isn’t necessarily saving $68,000. The first step is finding out what you actually qualify for. You can easily do that online with Harney Homes Preferred Lender and there is no weird pressure and you can use that pre-approval to buy ANY home not necessarily just a Harney Home. **

2. How does buying a new home compare to continuing to rent?

Let’s put some real numbers behind this.

Imagine you’re currently renting for $2,000 per month.

That’s $24,000 every year.

After five years, assuming your rent stayed exactly the same—which isn’t guaranteed—you would have paid:

$120,000 in rent.

And at the end of those five years?

You don’t own the home.

Now imagine purchasing a $340,000 home with 3.5% down.

Your estimated loan amount would be approximately $328,100.

Using a 30-year fixed mortgage at today’s illustrative rate of 6.66%, the principal-and-interest portion of the payment would be approximately:

$2,108/month

That’s before property taxes, homeowners insurance, mortgage insurance and any HOA dues.

So yes—buying may have a higher monthly payment than your current rent.

But here’s what makes homeownership different:

Your payment isn’t simply disappearing every month.

Part of your mortgage payment goes toward paying down the loan balance. Over time, that creates equity in your home.

You also have the opportunity to benefit if your home’s value increases.

Renting gives you a place to live.

Owning gives you a place to live while also giving you an opportunity to build an asset.

That’s an important difference.

And there’s another benefit that renters often overlook:

You get to make the home yours.

You don’t have to ask a landlord whether you can paint the bedroom. You don’t have to worry about your lease expiring and your rent going up. You aren’t building someone else’s equity.

In fact there is a LARGE possibility your home payment will go DOWN in a few years.

Here’s how: when interest rates go down, you can refinance to lower your payment OR when your each 20% equity, you will stop paying PMI. 

You get to choose the neighborhood, the finishes, the backyard and the space that fits your life.

And with a new home, you also get the benefit of starting fresh—with modern finishes, energy-efficient features and fewer of the immediate repair and replacement projects that can come with an older home.

3. How much would I need up front?

This is where it gets important to talk to a lender before deciding that you aren’t ready.

For our $340,000 example:

With 3.5% down:

$11,900 down payment

But the down payment isn’t the only upfront expense. Buyers may also have closing costs, prepaid taxes and insurance, lender fees, inspections and other expenses. Fannie Mae estimates closing costs can commonly range from about 2% to 5% of the purchase price, although the actual amount varies by transaction.

For a $340,000 home, 2% would be:

$6,800

And 5% would be:

$17,000

That doesn’t mean you should automatically budget $17,000 in closing costs. Your actual costs could be considerably different, and credits or incentives may be available depending on the loan, seller, builder and transaction.

Most Builders are giving some sort of closing cost or rate buy down to help make these numbers WAY less. So its a GREAT time to buy! In a hot market these financial incentives disappear and the prices go up: BIG TIME. 

That’s why it’s so important to get an actual estimate instead of guessing.

Here’s the question to ask:

“If I wanted to buy a $340,000 home, how much cash would I realistically need to close?”

You may be surprised by the answer.

4. Is now the right time for me?

There’s no universal answer to this question.

The right time to buy isn’t simply when interest rates hit a certain number.

It’s when your personal finances, lifestyle and goals make homeownership a good fit.

Ask yourself:

• Do I have relatively stable income?
• Am I planning to stay in the area for several years?
• Is my credit in a position where I can qualify?
• Do I have money saved—or a realistic plan to save?
• Can I comfortably handle the estimated monthly payment?
• Am I tired of paying rent without building ownership?
• Do I want the freedom and stability that come with owning?

If most of those answers are yes, it may be worth exploring your options.

And here’s something else to remember:

You don’t have to predict the future of the housing market.

Nobody knows exactly where mortgage rates or home prices will be a year from now.

You can only make the best decision based on your circumstances today.

If rates eventually fall, refinancing may be an option for a homeowner who qualifies. If home prices rise, owning means you participate in that potential appreciation. If you continue renting, you still have a monthly housing payment—but you don’t build ownership in the property.

There isn’t a perfect time.

There is a time when buying makes sense for you.

5. What would my monthly payment REALLY be?

This is probably the number you want to know.

Let’s use our $340,000 home example.

With 3.5% down, you’d put approximately $11,900 down, leaving a loan amount of approximately $328,100.

At the current Freddie Mac average 30-year fixed rate of 6.66%, the estimated principal and interest payment would be:

Approximately $2,108/month

But that’s not necessarily your total monthly housing payment.

Your actual payment will also include:

• Property taxes
• Homeowners insurance
• Mortgage insurance
• HOA dues, if applicable

So let’s say, purely for illustration, that those additional costs totaled another $500 per month.

Your estimated total housing payment would be around:

$2,608/month

That’s an example—not a quote.

Your actual payment could be higher or lower depending on your credit, loan program, interest rate, taxes, insurance, down payment and the specific home you purchase.

And that’s exactly why getting a personalized pre-approval is so valuable.

Instead of wondering, “Can I afford a house?”

You can find out:

“What home can I comfortably afford?”

So… Are You Really That Far Away?

Let’s go back to the renter paying $2,000 per month.

Over five years at that same monthly rent, you would spend:

$120,000

You would have had a place to live—but you wouldn’t have ownership in that property.

Now imagine using those same five years as a homeowner.

Your mortgage payments would have gone toward your loan balance, while you potentially benefit from changes in your home’s value.

That’s the part of homeownership that can be easy to overlook.

You’re not just paying for somewhere to live. You’re working toward owning the place where you live.

And you don’t necessarily need $68,000 sitting in your bank account to get started.

You may need 3%, 3.5%, 5% or another amount, depending on your loan and circumstances. Some buyers may also qualify for assistance or other programs that can help with upfront costs.

The biggest mistake you can make isn’t deciding not to buy.

It’s deciding you can’t buy without ever finding out.

If you’ve been renting and wondering whether homeownership is actually within reach, let’s figure it out.

You don’t have to commit to buying a house.

You don’t have to have everything figured out.

**Start with a conversation. Schedule a Visit with our Community Teams and they will help you! Starting with a loan conversation helps a lot too! **

Because you might be closer to owning a home than you think.