The millennial generation views home ownership very differently than past generations and for good reasons. Their parents and grandparents may have been able to purchase a home in their 20s and 30s. But we’re now in a different economic world where student debt and the cost of living has skyrocketed. Millennials face bigger financial struggles and many don’t have the same opportunities to buy as their elders. But home ownership is still a worthy goal that people want to achieve. Here are eight tips for the largest generation hoping to buy their first home.

Raise Your Credit Score First

A low credit score is one of the biggest factors preventing first-time home buyers from qualifying for a mortgage. Average credit scores needed for conventional loans are normally in the 700s, while many millennials find themselves in the low- to mid-600s. There are other types of loans available, such as FHA, USDA, and VA loans, that allow for lower credit scores and down payments as long as you meet specific low-income qualifications and other factors. The best strategy is to work on raising your credit score before applying for a loan. Pay down debt as much as possible, pay all bills on time, and keep credit card balances low. If necessary, work with a financial credit counselor for a strategy that works best for your circumstances. Be patient as it could take six months to over a year to see significant improvement in your score.

Save for a Down Payment

Saving for a down payment as early as possible is one of the best ways to help you get a loan. The more down payment you have, the lower the interest rate you can qualify for. There are many different loan types that require anywhere from 3.5 to 20% of a home purchase price. Lower than 20% will probably mean that you have to pay PMI (private mortgage insurance), which is additional interest on top of your loan interest. Start with a clear plan of how much house you can afford and the amount needed for a down payment. Calculate how long it will take to get there and consistently save. Nearly a fourth of millennials today need a friend or relative’s monetary gift to speed up the process of reaching a down payment.

Pay Off Student Loans and Other Debt

The average student loan debt is now $37,172 with a monthly payment of $393 (according to Nitro College). Student loans are the biggest obstacle standing in the way of home ownership. Paying down student loan debt along with any other debt (car loans and credit cards) is critical to the goal of home ownership. Realistically, to take on mortgage debt, there has to be enough income to reduce other debt first.

Hold a Long-Term View of Home Ownership

There will always be ups and downs in the real estate market. Home values typically appreciate over the long-run. If you’re someone who is willing to stay in the same home for more than a couple of years, then home ownership may be right for you. If you like the freedom to move from city to city, then renting is probably a better choice.

Be Aware of Both Immediate and Long-Term Costs

Be a savvy home buyer by knowing all the probable costs involved in home ownership. Immediate costs are not only a down payment and monthly mortgages. There will be earnest money, closing costs, possibly other lender fees, as well as recording fees, insurance, and home inspection costs. Longer-term, buyers often forget to budget for property taxes, maintenance and upkeep of a home, as well as furnishings and updating a home for proper functionality. Putting in the effort to research these costs will make you a prepared home owner rather than one taken by surprise who ends up in financial struggle.

Determine the Best Kind of Housing for You

Before jumping into a search for a specific type of home, take stock of your current lifestyle and the one you’ll need in the near future. Do you want to take on responsibility of a yard and exterior home maintenance (roofing, gutters, exterior paint, etc.)? If not, maybe you’d prefer a condo where a paid HOA takes care of these matters. Will you need a yard for kids and pets? Will you travel a lot and need someone else to take care of the lawn? Maybe you want a pool and gym facilities on the premises. Deciding between a condo and a single family home should reflect the way you live your life, as well as what you can afford. Weigh your options carefully.

Find a Home You Can Reasonably Afford

When you get qualified for loan, set your budget at the amount that allows rooms for all the other expenses life requires. Don’t stretch your dollars to the point where you sacrifice further savings for things like retirement or a child’s college fund. Staying in the affordable range might mean sacrificing a particular hot area of town or choosing a home that requires updating slowly over the years. Make sure the home is functional for your family’s needs and be willing to sacrifice a few wants if it means you can maintain financial health.

Rely on an Experienced Realtor

Use an experienced Realtor, particularly one who frequently works with first-time buyers, to help educate you on the buying process. A good Realtor will inform you of things you didn’t know you had to learn. The more you know about the process of buying a home, the better poised you’ll be to make an offer and set expectations. Be ready to stay patient in order to make a wise choice. Don’t jump into making an offer just because you’re excited to own. See enough homes to know what you will serve you best and what projects you’re willing or unwilling to take on once you move in. A good real estate agent is one who listens to your needs and protects your best interests when faced with uncertainty.

Real Estate Term of the Week

VA Loan: A mortgage loan available through a program established by the U.S. Department of Veterans Affairs (VA) (previously the Veterans Administration). With VA loans, veterans, service members, and their surviving spouses can purchase homes with little to no down payment and no private mortgage insurance and generally get a competitive interest rate.

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