If you want to buy a house but have limited funds, you can wait and save up more for a down payment, or you can buy a small starter home. If you go the second route, you might be able to build an addition later, as your income rises and your needs change.
Benefits of Buying a Small Starter House and Expanding Later
If you’re making high rent payments, you might be eager to become a homeowner. Mortgage payments for a starter house might be less than what you’re currently paying in rent.
The sooner you buy a house, the sooner you’ll be able to start building equity. If you’re on a tight budget, you can buy a modest house in your price range, then add more square footage later, when you’re earning more money. That can boost the house’s value and increase your equity even further.
If you buy a starter home and build an addition later, you’ll be able to customize the house to suit your family’s needs. That can be a particularly appealing option if you don’t know what your future needs will be. Maybe you plan to have kids, but you aren’t sure how many. You might be anticipating the day when a parent can no longer live independently. In that case, you can buy a small house and add an in-law apartment later, if necessary.
Problems You Might Encounter
Zoning regulations vary from one city or town to another. Before you decide to buy a house, research the local rules to find out what you would and would not be allowed to do.
Often, a house must be a minimum distance from the property line. You might find a starter home that you love but learn that you wouldn’t be allowed to expand its footprint. You might be able to add another level or convert the attic to a living area, or local regulations might prohibit those sorts of changes.
Building an addition, even a small one, can be expensive. If you live in the house for several years before the expansion, you might be able to pay for it using equity. If not, you might have to take out a loan.
Increasing a house’s square footage generally increases its value, but that’s not always the case. An addition should look and feel like it was part of the house’s original design. If it seems out of place, it can make the house unappealing to future buyers.
Explore Your Options
Affordable starter homes are out there, but in some places, they’re hard to come by. If you find a starter house that fits your budget, you might not be able to expand it the way you’d like because of zoning rules. Discuss your goals with a local real estate agent and find out what’s available in your desired area.
