The 9 Sacrifices You Must Make To Find An Affordable Home

Despite the bad rap homeownership – and particularly home affordability – has gotten in the last few years, it’s still part of the ‘American Dream.’ But now, in 2014, there’s caveat to that dream: can buyers find a home to purchase within their budget?

Aug 24, 2014 at 2:29PM

Despite the bad rap homeownership – and particularly home affordability – has gotten in the last few years, it's still part of the 'American Dream.' But now, in 2014, there's caveat to that dream: can buyers find a home to purchase within their budget?

Millennials and first time buyers are particularly daunted by home affordability. In Trulia's latest survey, 15% of potential homebuyers age 28-34 said they wouldn't even sacrifice their Netfix subscriptions to save money toward home ownership – a notion that makes saving seem like an even tougher uphill battle. With mortgage requirements deservedly more stringent and down payment requirements higher than ever, for most, finding that affordable dream home is going to take some compromising.

Here are nine savings sacrifices that won't foul-up your finances – and may help you land a house.

This is overall the biggest sacrifice you can make because home prices in your area dictate exactly what you'll be getting for your dollar. But how much of a price sacrifice do you need to make? My rule of thumb is this: Purchase a home that is 20% less than what the bank tells you that you can afford. By ducking under your max price by 20%, you're giving your budget some room to breathe, ensuring that you'll never be in over your head each month.

Cash In The Bank
Another big sacrifice is liquidity. While you may have to drain the piggy bank to make the numbers affordable, hitting the 20% down mark immediately lowers your monthly payment with a smaller loan, better interest rate, and no private mortgage insurance (PMI).

Of course, we know that it's all about location, but you may not be able to purchase in hottest hood within walking distance to the main drag. Even proximity to recreational areas, shopping, and dining may have to give way in order for the math to work in your favor. What's the alternative? Look for a home near transportation, or at least within a short drive, that still allows easy access while keeping you just outside the priciest areas.

Home Type
It's a big sacrifice, but if location and other factors are more important, you may have to make the shift from a single-family home search to a condo, townhouse, or duplex. Especially in dense metropolitan areas, single-family homes may be way out of reach, while a condo or co-op might just get you the address you want with the home affordability you need.

Square Footage
The average midsized home is approximately 2,363 square feet. Interestingly, just 15% of potential homebuyers surveyed in Trulia's 'American Dream' surveysaid they'd now like to purchase a home with 2,600 or more square feet. Cutting back on size could put your dream home within reach. Remember, smaller square footage does always equate with being cramped; look for homes with open floor plans and lots of access to outdoor living spaces.

Move-in Condition
Paying for someone else's upgrades is a luxury you may just have to sacrifice. The best way to get more home for your money is to find the "fixer" that needs some TLC. If you're trying to keep that bottom line down but can spend some time at your local home improvement store, purchasing a fixer-upper is great sacrifice to make.

Extra Bedroom
It's always nice to plan ahead, especially, if you're starting a family. But having a spare guest room that sits empty until your sister comes for her annual visit may be something you can sacrifice. Instead, look for homes that have a den or even a finished basement or attic that can be utilized for those occasional out-of-town visitors.

Outdoor Space
Everyone enjoys backyard pleasures – the grassy hills, a hammock swinging from a tree. But it's time for a reality check: by today's new construction standards, the backyards of yesteryear are a thing of the past. Land is a valuable commodity that will need to be sacrificed in order to find a home in an affordable range. You may even find that all you really need is a great outdoor deck that can accommodate some friends and a barbeque grill.

All "Buy" Yourself
Sure, you wanted to buy a home all on your own. But you may just have to hit up the folks for a hand out in order to get a leg up, since a larger down payment will considerably lower your monthly mortgage bill. Your parents can each legally "gift" you $14,000 per year, and if they both do, $28,000 can make a huge impact on your ability to put 20% down.

This article originally appeared on

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information