One of the biggest dreams for any adult is owning a home they know they can call theirs. A home where they can set the rules, decorate, and transform in any way they want, and a home they never need to worry about getting kicked out of. Owning a house will be one of the biggest investments you’ll ever put down in your life.
One of their biggest dreams is to be young and own their home, so you have even more years to enjoy it. No need to worry about landlords, no need to stress over getting your deposit back, and no worries about paying hundreds if not thousands in rent each month.
Owning your own home means you’ve made it in life; you have something that no one can take away, and it’s one of the biggest accomplishments anyone hopes to make.
But honestly, there are so many obstacles when it comes to getting to this stage; in fact, the average age in the United States alone for buying a house is age 33, and chances are high that this average will move further and further away slowly.
So, with that said, one major question lingers, and that’s, “Can I buy a house at 18 with no credit?” Honestly, it’s a fair question since credit history will play such a major role in the home-buying process in general.
Yeah, while it’s an uphill battle, buying a house at 18 without any credit is not impossible. But there is so much that needs to be considered and a lot that needs to be looked into before you start this whole process. So, from the possibilities, challenges, and strategies that young adults face when it comes to credit history (or lack thereof), here’s everything you need to know to make your dream a reality.
The idea of buying a house at the age of 18 probably sounds like a lofty aspiration, right? Well, in all honesty, it is. You’re going to need to approach this dream with a realistic mindset. It’s not exactly impossible, so that’s one thing you can at least think about is that any adult without a credit history can possibly buy a house. For the most part, it’s going to be challenging though.
It will require careful financial planning, realistic expectations, and a strong support system. Some 18-year-olds can achieve this milestone, while others might find it more practical to rent their home and eventually build up towards homeownership gradually by getting financial stability and improving their career prospects. The journey to owning a house itself isn’t going to be the same for everyone.
But in general, regardless of what route you take or want to take, you need to remember that you will have to be patient, incredibly patient. They say that patience is a virtue, and it’s true when it comes to such a huge milestone. You’ll have to be realistic with yourself, no matter how uncomfortable it might be, and be sure to have some perseverance, too.
Exploring Homeownership for 18-year-olds
When it comes to home ownership, it’s not exactly a walk in the park. Sure, for the most part, it’s far cheaper than renting your home, and you’re free to do what you want. While monthly payments are generally going to be cheaper, it doesn’t immediately mean that there aren’t going to be costs that need to be covered. There’s going to be that upfront cost for the home, the down payment, and this is usually one of the biggest hurdles for any homeowner because you’ll have to have a large percentage that you have saved up.
There are Financial Hurdles
While it’s entirely up to you if you want to put down 20% or some other percentage, needless to say, this can’t be skipped. On top of that, there are going to be an ongoing cost that goes beyond that initial purchase and monthly mortgage payments, such as:
- Maintenance: Sometimes issues happen with a house, whether it’s plumbing, electrical, insulation, roofing, you name it. Skipping out on repairs means that you’re furthering the risk of more issues, which will create more damage to the house and make repairs more expensive.
- Property taxes: You’ll need to pay annual property taxes, which will vary based on where you live and the property size.
- Utilities and Insurance: Utility costs may vary based on the home (age and size), homeowners insurance, and other recurring expenses such as HOA fees.
Extensive Research is Crucial
So, you’ll need to educate yourself about the process of being a homeowner and even the general real estate market for the area you want to live in. So, be sure to do extensive research, such as the local housing market and the average property prices. You must understand all the steps in buying a house, from house hunting to closing the deal.
Budgeting is Everything
Mostly, you’ll probably find information about the more traditional way to buy a house, i.e., credit. Still, there is a lot of information out there online about getting a house without credit. Another thing you’ll want to note is budgeting skills, too; you’re going to have to understand and even develop a proper budgeting strategy for this. You’ll need to manage your finances responsibly, and if you’ve been saving up since your teens, you probably already have a good headstart.
No Credit? No Problem: Buying a House at 18
Suppose you’ve looked around online for advice and information about buying a house. In that case, there’s a very high chance you’re seeing information mostly on how to get a house, and it’s mostly referring to credit, making sure it’s good, and getting a loan from a bank, right? After all, this is the most common way to buy a house.
But like we’ve discussed, you don’t always need credit or proof of credit history to get a house. The average 18-year-old tends not to have credit, let alone a credit card. However, in general, there are some challenges of having no credit, but they’re not exactly roadblocks either.
Understanding the No Credit Dilemma
So, why does having no credit matter? Well, your credit history is going to be a major factor when it comes to securing a mortgage. Lenders will use your credit score to assess how risky of a borrower you are. While no credit doesn’t immediately equal to having bad credit, it’s going to leave at least lenders questioning if you’re risky. The lack of credit history means there’s a lack of information for lenders to look into, meaning they can’t make an informed decision about loaning you money.
This is, unfortunately, just one of those vicious cycles. To build credit, you need credit, but to get credit, you’ll need credit history. But of course, the whole point is to try and buy a house at 18 without credit history, so while the cycle is harsh, almost predatory, and feels impossible- it’s still possible to get a house without credit. Still, it means that you’ll most likely get this house less traditional.
Tips for Purchasing a Home at 18 with No Credit
For the average 18-year-old, it will take a lot of determination, responsible financial habits, and even the right strategies to get a house at such a young age. Sure, having no credit history will pose some initial challenges, but you can still have a credit history and face some challenges- even if it’s good credit. Homeownership is a challenging path in general.
You need to remember that age isn’t a barrier to achieving your dreams; it’s one with more obstacles than it is at 18, but it’s really about the right strategies and approach. So, since the traditional path doesn’t work, here are some tips about getting a home with no credit.
Build Up a Large Down Payment
One of the best ways to compensate for the lack of credit history is through a huge downpayment. For the most part, this can have the potential (so not guaranteed) that the lender’s perception of you isn’t such a risk. So, this could increase your chance of approval.
Prove That You Have Financial Stability
Usually, credit history is a sure-fire way to prove financial stability, so with the lack of evidence, you’ll have to find other means of proving that you’re reliable and trustworthy for getting a loan from the bank. This can include having a steady employment history (it might be challenging to prove at a young age), consistent income, and a solid savings account.
Consider Alternative Mortgage Programs
While they’re not uncommon, you could always look into mortgage programs that cater to borrowers with nontraditional circumstances like the lack of credit history. These programs tend to be more flexible regarding requirements, and they’ll usually consider factors like rental payment history, utility bill payments, and other financial responsibilities.
Explore Mortgage Options for First-Time Buyers
There are mortgages out there that cater to first-time home buyers. You could look into the Federal Housing Administration loan since this requirement lower down payments and more lenient credit requirements. If you’re eligible, you could consider getting a VA loan. If you’re active in the military, this might be an option for you since this doesn’t require a down payment, and the credit requirements are also more flexible.
Explore Lease-to-Own Financing Options
If there’s a house you have your heart set on, you could look into lease-to-own financing options. To be frank, these are fairly rare, but they do exist. When it comes to this route, you’ll be making monthly payments to the seller directly, and this option usually bypasses credit checks. You might be able to talk with a home seller and see if they’re open to such an option.
Try Co-Buying with a Family Member, Friend, or Partner
When a young adult rents for the first time, there’s usually a co-signer, such as a family member. So, you can think of this as being fairly similar. The co-signer must have a well-established credit history, or this might not work well. Their creditworthiness can help enhance your joint application, which can drastically help secure your chances at getting a mortgage for a house.
So this was already somewhat mentioned earlier, so going into more detail. If you maintain a strict savings plan and budget effectively, this can also help demonstrate financial responsibility and help your ability to manage home ownership costs.
Pay Everything Upfront
If you can’t get a loan or have no interest in getting one, you could always consider buying a house in cash. The thing with this is that you’ll have to save up a lot of money to do this, and you might be able to get help from loved ones if you’re lucky. Usually, fixer-uppers and small homes in rural areas will be far easier to afford and obtain in cash. Sometimes, home sellers will be open to negotiating costs if you’re paying in cash since this means they’re getting money quicker.
Build a Strong Employment History
So this may or may not be possible for you to try. If you’ve been working for the same employer since you were legally allowed to begin working (so it depends on what state you’re in), then this could work to your advantage. A stable job and consistent income are important, and this will be one factor that lenders factor in. It essentially proves that you have financial stability and will have the ability to make mortgage payments.
Explore First-Time Homebuyer Programs
Depending on what region you’re from or where you want to move to, you might be able to use this to your advantage. Some local and regional-focused programs are meant to assist first-time homebuyers. These programs are usually more lenient regarding credit requirements; some will even provide financial assistance such as grants.
Seek Professional Guidance
You can only find so much information online, and it won’t always be written by a professional with in-depth knowledge. So, sometimes, it’s just best to contact professionals for help. Try to work with real estate agents, a mortgage broker, or even a financial advisor specializing in assisting young homebuyers. These three professionals can guide you and help you navigate the home-buying process effectively.
Is It Realistic for an 18-year-old to Buy a House with No Credit?
The real estate landscape is evolving, and it’s changing more rapidly now than ever before. While conventional wisdom has told everyone that a solid credit history and a high-paying job are essential for securing a mortgage, it’s not entirely true. You need to remember that credit history and FICO scores are still a fairly new concept. Think about your grandparents or older family members; they probably bought their homes before credit scores existed.
There were factors such as character references, payment history, income verification, debt-to-income ratio, collateral, and employment verification. As you see, there were so many other options that lenders used to look into before credit history was a thing. So, the fact that you lack a credit score or credit history doesn’t immediately mean that you can’t get a house at 18. The strategies mentioned above help show and guide you to getting a house without needing a strong credit history.
Breaking Down the Process: Homebuying at 18 with No Credit
Is the process for homebuying with no credit at 18 complicated? Yes, it will be complicated, but it doesn’t mean it will be impossible. Breaking the process down into small increments is going to be a nice way to remind yourself that it can be possible. So, here’s the process you might expect it to look like.
Start By Establishing Clear Financial Goals
So, before diving into the home-buying process, you’ll need to establish financial goals and a budget. How much can you comfortably afford for a down payment? What about monthly mortgage patents, property taxes, insurance, and emergency expenses like maintenance? Be upfront with yourself on how much you can afford.
Start Saving ASAP
You can’t buy a house if you don’t have any money. Plus, without credit backing, a huge down payment will be critical. This will help reduce the amount you need to borrow, but at the same time, you’re proving to lenders that you’re financially responsible.
Explore Mortgage Options You Quality For
You can count on traditional mortgages being out of the question since you’ll need a credit history. So be sure to look into other mortgage options you qualify for, such as Lease-to-Own Agreements and Owner Financing.
Build a Solid Financial Portfolio
Lenders will scrutinize your financial stability since you don’t have a credit history. So, you will have to build some financial backing, and a financial portfolio will help a lot. So this is going to include:
- Showing that you have a steady employment history
- Building and maintaining a healthy savings account
- Proof that you’re paying bills on time
- Having little debt, if any.
Find Someone to Be a Co-Buyer
While it’s super commendable that you want to do it all by yourself, sometimes it won’t be possible unless you can pay everything upfront in cash. So, if you aren’t or can’t do that, then having a co-buyer will help. Pick someone you trust with a strong credit history, like a parent, to be your co-buyer. Their strong credit will help strengthen the application, meaning that your chances of being approved will be much higher.
Learn to Negotiate
Some sellers may be willing to work with you, especially given your age, situation, and determination. If you plan on putting down a huge down payment, this will help your case.
Hire a Professional to Help
This was already said before, but it needs to be hammered down. Even if you’re planning to pay in cash, there’s always going to be a third party involved between the seller and buyer. So why not get one on your side? Some mortgage advisors and real estate agents solely focus on non-traditional homebuyers. They’re going to be able to help you navigate all of this, and they’re going to make your unique situation far easier to manage, too. Seriously, this is worth it, and this may very well be what helps boost you to becoming a homeowner at 18.
Overcoming Obstacles: Buying a House at 18 without Credit
At the end of the day, when it comes to buying a house, it’s not always going to be some “one-size-fits-all” solution. Everyone is going to have a financial situation that’s unique to them. There are plenty of obstacles you’re going to be able to overcome by achieving this feat.
- You don’t need to go the traditional route with a well-established credit history.
- You’re proving that age truly doesn’t have to be a barrier when it comes to homeownership. Nowadays, so many young adults perceive homeownership as an unachievable dream, so you’re immediately proving what’s possible while crossing out age stereotypes.
- You’re proving what limited options are meant to help those without credit, not hurt them.
- You’re laying the groundwork for securing a strong financial future by investing in property earlier in life rather than in your mid-20s to 30s.
- Best of all, you’re redefining the norms and overcoming some of the biggest challenges young adults face.
Purchasing a home at 18 without a credit history is indeed a unique, hard journey, but it’s still possible. While many steps need to be factored in, like saving up, having a frugal lifestyle, and demonstrating that you can have financial stability, at the end of the day, you’re overcoming one of the biggest obstacles associated with the lack of traditional credit. That’s something incredible; you should feel proud about it, too!
Age should never deter you from pursuing your dream of owning a home. Yes, much hard work and stress come with it, but it’s worth it. You can proudly be that homeowner at 18 and proudly lay out that solid financial foundation for your future. Stay determined; you can do it.