Does It Make Sense to Buy a Home In Your 20s?

by Christy Bieber | Published on Aug. 15, 2021

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A woman chats with her realtor while standing outside a nice house.

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You'll start building equity early, but you could find yourself tied down when you aren't ready to be.

Buying a home is a dream for many Americans. And, in some cases, people want to purchase one as soon as possible.

If you're in your 20s and are lucky enough to be in a financial position to purchase a property, you'll have to make a decision about whether it makes sense to buy at that age. Here are some pros and cons to purchasing a home in your 20s that are worth thinking about.

The biggest reasons to buy a home in your 20s

Buying a home in your 20s can help set you up for more financial security in the future. You can start paying down your mortgage loan and building equity (how much of the home you own outright) when you are young, which helps you build wealth.

And since you're working on mortgage payoff when you're young, you should have your home paid off well before you hit retirement -- as long as you stay in that home and don't borrow against the value of the home later in life.

Buying a house in your 20s can also help you get a foothold on the property ladder. That means your home could appreciate in value, enabling you to sell it for a profit later. Then you can turn around and use that profit to buy a bigger house as your family grows. If you purchase a property when you're young, you have more time for that appreciation to happen.

Why buying a house in your 20s may not make sense

While there are benefits to purchasing a home when you're younger, there are also some downsides.

First, it can be hard to save up a large enough down payment when you're still fairly young. If you don't put 20% down on your home, you could end up paying for private mortgage insurance. That makes borrowing for a home more expensive since you're essentially paying insurance premiums to protect your lender in case of foreclosure. And if you stretch your budget just to afford mortgage payments, your ability to accomplish other financial goals could be affected.

Second, buying a house is a big commitment. It's not a very liquid asset, since it can be expensive and time consuming to sell the property. For many people, their 20s are a time when their careers are developing, when their family life is changing, and when they may not have found the place they want to set down roots. If you buy a home before you've made some of your major life decisions, you could get tied down by the property, and it may be more difficult for you to pursue other goals.

Think carefully about how settled you are in where you want to live -- and avoid buying a property if you don't plan to stay there for at least two to five years. Also, make sure you can afford the mortgage payments both now and for the foreseeable future. Once you do these things, you can make the best choice about whether buying a house in your 20s is the right move for you.

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