How to Overcome Financial Hurdles to Achieve Homeownership in Your 20s

The first step? Build some radical honesty with your money right now.

Here’s how:

• Track What You’re Spending: Pull up your bank statement and write out every dollar that left your account in the past 30 days. Where is your money actually going? Be disgustingly real about it.
• Know Your Net Worth: Take all your assets (savings, car value, etc.), subtract your debts (loans, credit cards), and figure out where you currently stand financially.
• Figure Out Your DTI: That’s your debt-to-income ratio. Take your total debt payments in a month, divide them by your gross monthly income, and boom—that’s the number banks look at for lending. If it’s over 36%, we’ve got work to do.

If seeing these numbers makes you queasy, good. That means you’re finally being honest, and that’s the first punch in the fight.

2. Decide If You’re Buying Solo or With Backup

Let me ask you this: Are you trying to buy this house on your own, or is someone jumping in to help? This matters because two incomes combined can open a lot more doors (pun intended) when qualifying for a mortgage, especially if your co-buyer has better credit or less debt. But it also makes things messy if you’re roommates or friends teaming up just to afford something. Think long-term before committing. On the flip side, buying solo might take longer, but you call all the shots. There’s no wrong move here, but be clear on who’s bringing the money game to the table.

3. Stack Up Cash Without Losing Your Mind

Saving for a down payment doesn’t mean skipping every coffee or cutting Netflix. That “stop splurging on avocado toast” advice? Please.

Here’s what works instead:

• Automate Your Savings: Set up auto-transfers from your paycheck into a high-yield savings account that you don’t touch. If you never see it, you don’t miss it.
• Slash the Big 3: Housing, food, and transportation eat up most of your budget. Can you move to a cheaper rental? Meal prep to save on groceries? Sell your car for a used one with no payment?
• Hustle Smart: Freelancing, taking up a side gig, or selling unused stuff online can help. But don’t burn out chasing pennies—you need energy for the long game. Aim for an extra $500-$1,000/mo and throw it straight into savings.
• First-Time Buyer Programs: Look for state and federal programs like FHA loans or down payment assistance. They exist to help people like you get a win in homeownership.

4. Fix Your Credit Like a Pro

Your credit score can make or break the homeownership plan.

If it’s under 700, get to work today. Scores over 740 get the lowest mortgage rates, so aim high:

• Pay Down Balances: If you’re carrying credit card debt, prioritize paying it down. The closer you are to $0, the better your utilization ratio looks.
• Dispute Errors: Found an error on your credit report? Dispute it immediately. Don’t trust that it’ll “fix itself” because it won’t.
• On-Time Payments Only: Set all your bills on autopay. Late payments crush your score the fastest, and we’re not here to make it worse.
• Avoid New Credit: No new credit cards or loans. Banks want stability when you apply for a mortgage, not fresh debt.

Progress takes time, but every step forward is massive for locking affordable mortgage rates later.

About Overcoming Financial Obstacles to Homeownership

• How much do I need for a down payment as a first-time buyer?Good news: It’s not always 20%. FHA loans let you put down as little as 3.5%. Some conventional loans go as low as 3%. Search local programs, too—many states offer down payment assistance for first-time buyers.
• Can I buy a house with student loan debt?Yes! What matters most is your debt-to-income ratio (DTI). If your monthly debt payments (loans, credit cards) are 36% or less of your gross income, you’re on track. Focus on lowering that percentage by paying off some debts or earning more.
• Will bad credit stop me from buying a home?Nope, but it’ll make the process harder and more expensive. Mortgage lenders usually require a minimum score of 580 (for FHA loans) or 620 (for conventional loans). Work on bumping your score to get better interest rates.
• What’s a good credit score for first-time buyers?A score above 740 will get you the best interest rates. If you’re sitting in the 600s, focus on paying off debt and avoiding new credit to boost your score.