Between paying for a home inspection, a downpayment and closing costs, buying a house can be pretty expensive. But homeownership is a destination with many possible routes, so don’t think it’s out of your reach.
If you’re weighed down by student loans or haven’t reached your desired income, there are numerous opportunities out there that can make it more affordable. Here are just a few:
1. Community land trusts
Community land trusts (CLTs) are nonprofits that sell just the house while leasing the land for an affordable price. Lease agreements typically come with stipulations, such as income caps for buyers and limits on how much the home can be sold for in the future. CLTs prefer to find a buyer from their own waiting lists, but the seller can sell on the open market, provided the buyer meets the eligibility criteria.
Their method aims to protect the land from being bought by developers and ensure that it remains affordable for generations to come.
2. Community developers
Nonprofits and community advocates, including community development corporations (CDCs), often help low- to moderate-income households become homeowners. How do they do it? Many use government funding, but some also allow sweat equity, meaning you’ll help out with labor to offset costs.
3. Habitat for Humanity
One highly respected housing nonprofit is Habitat for Humanity, which has helped millions of people around the world build and renovate their homes since launching in 1976.
Habitat sells affordable housing to low-income households. The homes are typically built by volunteers to keep their prices down. Sweat equity may also be an option, such as by offering your time to help build the house. Can’t swing a hammer to save your life? Don’t sweat it. Habitat offers a range of options. You might even be able to help out at a Habitat ReStore (a home improvement shop that sells donated items at low costs).
4. Cooperative housing
Co-ops allow homebuyers to pool their finances to own property together. The shareholder-owners divide the mortgage, taxes, insurance, maintenance, and other expenses, and each owner is granted the right to occupy one unit. Rather than conventional mortgages, co-op buyers take out share loans (though the two are mostly the same thing).
Property taxes for co-ops are often lower than for other types of properties, as are their transfer costs during resales. However, you will need to budget for the monthly fees that cover the shared costs.
5. Contract for Deed
A contract for deed is a way to purchase a home directly from a seller without needing a mortgage from a lender (at first, at least). The owner keeps the title while you pay off the balance in payments that go directly to them. This is also referred to as “seller financing.”
However, after a specific number of years agreed upon by the buyer and seller, a balloon payment is due, meaning the remaining balance must be paid in full. At this time, buyers typically take out a conventional mortgage to cover the rest of the cost.
Thinking about buying a house with your buds? Our post “Flocking Together: Homebuying Trends Among Friends” explains how.
Need more help? The Keep Home™ app has all the resources you need for the homebuying and owning process.