First Home Buyer Challenges: And What You Can Do In 2023

First-time homebuyers are often faced with many challenges that don’t come up when they’re buying their second, third or fourth home. You may be wondering where to find money to put down on the home loan, how to decide if you should take out a 30-year or 15-year mortgage, and whether it makes sense to buy an existing home or build one from scratch. When it comes to these first-home buyer challenges, there are a few things you can do in 2023 that will help you solve them all.

First Home Buyer Challenges: And What You Can Do In 2023

Deposit requirements are rising

The rising deposit requirements are just one of the many challenges first-time buyers face. 

While a 5% deposit sounds like an achievable goal, the house you want may not be available for that price. 

You may need to save up for a 10% deposit or look for something cheaper. Check out your options on Zoopla's website or speak to a mortgage broker. 

You could also ask friends and family if they have any spare cash you can use as part of your deposit. 

If none of these work, don't give up! There are more ways than ever before to find affordable homes in 2023 and beyond.

More people are buying homes

More and more people are buying their first home, and it's no wonder. With a relatively low-interest rate, an improving economy, and the return of equity in homes nationwide, it's a great time to buy. But with these benefits also come certain challenges for first-time buyers. With so many decisions to make when it comes to buying a home—where to live, what type of home to buy, what kind of mortgage loan is best for you—it can be easy to get overwhelmed or confused.

Borrowing capacity is shrinking

The borrowing capacity for first-time buyers is shrinking, and the housing market is stagnating. It's no wonder that many people are wondering what to do in order to buy their first home. The good news is that there are plenty of options for first-time buyers. A few simple changes can make a big difference. Here are some tips for overcoming these challenges. First, consider waiting it out if you're not quite ready yet. If you have enough saved up for a down payment, or if you're planning on moving out on your own any time soon (to either live with family or rent), then consider renting while you continue to save up. Second, try applying for loans from other lenders - even if they have higher interest rates than the ones your primary bank offers - as another avenue to get financing.

Mortgage stress is increasing

Mortgage stress is not a new concept in the U.S., but it's becoming more prevalent as housing prices rise and wages stagnate. According to recent research, nearly one-third of American households are considered cost-burdened, meaning they spend more than one-third of their income on housing. This can be difficult for first-time buyers who may not have savings to pay down a hefty down payment and also carry the weight of student loans or credit card debt with them.

Rental costs are high

Rental costs are a big challenge for first-time buyers. The average cost of renting a two-bedroom apartment in Los Angeles is $2,000 a month. That's more than the monthly income of those who make less than $50,000 a year. This is not a financial burden that many people can handle on top of other expenses like groceries and health care. But there are ways to save money for your future home by cutting out some of these costs now. One option is to lower your living standards so you have more room in your budget to save money. For example, if you live alone, move into a smaller apartment or house with roommates or family members. If you live with roommates or family members already but want to buy your own place someday, this might be an option as well.

Wages are not keeping up with inflation

When the cost of living keeps going up, wages don't always keep up. This is especially true for low-income earners or those just starting out in their careers. These challenges for first-time buyers can make it difficult to save for a down payment and buy a home. The good news is there are solutions available to help you get the ball rolling with your dream of homeownership, including saving more money and looking for opportunities to cut costs in other areas of your life.

Saving for a deposit is hard

It can be really hard to save for a deposit when you're just starting out. It takes time, discipline and dedication. But the good news is that there are lots of ways that can help. 

*One way is through shared ownership schemes which allow buyers to purchase their first home with a smaller deposit and monthly payments over a longer period of time.*

First-home buyers are missing out on stamp duty concessions

Stamp duty is a tax on the transfer of property ownership in Australia. Stamp duty concessions are designed to make housing more affordable for first-time buyers, but they are not as helpful as they should be. Stamp duty rates vary depending on the state or territory in which you buy your home. For example, in NSW stamp duty will be around $5,000 for a $600,000 house.

Stamp duty is a big barrier to entry

Stamp duty is a huge barrier to entry for first-time buyers. Stamp Duty is the amount of money that you have to pay the government when you purchase a property, which varies depending on the type of property and its value. Sometimes stamp duty can be up to ten per cent or more of the final purchase price, making it challenging for first-time buyers who are saving hard and may not have much disposable income.

There are still ways to enter the market

One of the biggest challenges for first-time buyers is saving enough money to buy a house. But, if you are strategic about your savings and budget, there are a number of ways to enter the market as a first-time buyer. Consider these steps: 

  1. Start Saving - Make it your goal to save $1,000 each month in a savings account dedicated to your down payment fund. That may sound like a lot but it can be done by cutting out little luxuries such as eating out, getting coffee every day, or buying that extra pair of shoes. 
  2. Get Creative - Consider looking for roommates to help cover rent or asking relatives for an interest-free loan that can be paid back after you close on your home purchase. 
  3. Save More Money By Working Harder - Ask yourself how much more money could you put towards your monthly mortgage payments if you work just one more hour per week? 
  4. Explore Different Types Of Housing - Not all housing types require the same amount of cash upfront. Look at options such as townhomes, condos, coops and cooperatives which may require less than 20% down or even 0% upfront! 
  5. Be Patient - Understand that with some time and planning, you will be able to make this dream come true!