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Looking for a Single-Family Home of Your Own? Consider These More Affordable Alternatives

In today’s high-priced housing market, you may be wondering if you can afford a single-family home. The good news is that you may be able to afford more than you think—and there may be less expensive options that you may not have considered.

If you’re struggling to afford a single-family home, you may want to look into purchasing a condo, a manufactured home, or even a multi-family home, where you can live in one unit and rent out the others to help you pay your mortgage.

Co-buying with friends and family is another option that’s growing in popularity as it allows multiple people to pool their money together to increase their buying power.

There are also down payment assistance programs that many buyers may not realize are available. These programs can help with down payments and closing costs.

“I talk to people every day that tell me they can’t afford to buy a home,” said Dan Harrington, a New American Funding senior loan consultant based in Los Angeles, Calif. “When we run the numbers and go over programs a lot of people are pleasantly surprised with their buying power.”

Types of affordable homes

There are several alternatives to single-family homes that may be less expensive. Three of the most popular are:

Condos

A condominium (condo) is a housing unit inside of a building or complex that can be privately owned. Condos are often smaller than single-family homes and they generally share walls with other units. They’re common in cities, although buyers can find them in many suburbs and towns as well.

But what they lack in square footage (and big, private backyards) they may make up for in savings. Buying a condo may be a more affordable option depending on your local housing market.

It’s important to remember that condos have homeowners’ associations that have their own rules and regulations. This is especially important if you are buying with an FHA loan or VA loan as a condo must be approved by these agencies in order for you to qualify to buy using either loan.

“Approving a client for a condo purchase almost always includes qualifying the homeowners association,” said Harrington. “Among other requirements we need to make sure the HOA is fully funded, has no litigation against it, and has more than 50% owner-occupants.”

Manufactured homes

Manufactured homes are homes that are built inside of a factory, then installed on a plot of land. They are constructed to meet the U.S. Department of Housing and Urban Development’s (HUD) building code. And they are often more affordable than single-family homes that are built on site.

The average sales price for a new single-family home in Oct. 2024 was $545,800, according to the Census Bureau, while the average cost of a manufactured home is $124,300, according to the Manufactured Housing Institute (MHI).

Manufactured homes include mobile homes. Many buyers of these properties own the homes and the land that they sit on.

Lenders may require buyers seeking a mortgage to permanently attach the home to a site and purchase that land (if they don’t already own it) depending on the type of loan.  

Multi-family homes

Another option is buying a multi-family home. While they may not be cheaper than single-family homes, duplexes, triplexes, and quadplexes can help homeowners earn income to pay off their mortgage.  

“Clients can buy a 2-, 3- or 4-unit property, live in one unit and rent out the units,” said Harrington. “We can use the rent from the non-owner-occupied units to help them qualify for the loan. In some cases, the rent from the units covers the entire mortgage, property taxes, and insurance.”

Co-buying a home

An increasingly popular solution to housing affordability is co-buying. Co-buying a home is what it sounds like, buying a house with one or more people, usually friends or relatives or even a partner.

Co-buying isn’t always easy—and not just when choosing paint colors or design aesthetics. Buyers have to agree on the bigger things, like splitting the costs of maintenance and repairs, and what to do if one owner wants to sell their share in the property.

This arrangement requires communication and cooperation. However, it can also result in substantial savings if buyers are all sharing the down payment and closing costs, monthly mortgage payments, utility bills, and other expenses.  

“Co-buying has its challenges and requires all the parties agree on terms and responsibilities, but [it also] allows people to cut their housing costs,” said Harrington.

Don’t give up

When people think of buying their own abode, they often assume that means a single-family home that they purchase on their own or with a partner. But there may be more options available.

“Homebuyers should stay positive and get educated,” said Harrington. “Talk to a professional to find out where you are and work together to get where you want to be.”

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5 Ways Homeowners Can Get Financially Fit in the New Year

It’s a new year. That means it’s time to get fit—financially fit, that is.

One of the best gifts that homeowners may be able to give themselves in 2025 is to whip their finances into shape. 

Even if you break all your other resolutions (yes, it’s really hard to exist on salads and smoothies and go to the gym at the crack of dawn every day), there are some simple dollars-and-sense things you can do that are virtually painless on your budget.

“It’s always a good idea to do a financial overview using your home because typically it’s the largest asset you own,” said Amber Ernst, a sales manager at New American Funding in Bettendorf, Iowa.

“Now is a good time to review your finances and see whether you should refinance or consolidate your debt,” she said.

1. Make additional mortgage payments

If you have a mortgage, making extra payments can help you to reduce the principal and potentially save you thousands, if not tens of thousands, in the interest you pay over the life of the loan. It can also help you to shorten the duration loan.

You can pay half of your monthly loan payment every two weeks, which will add up to an extra monthly payment each year. You can also put bonuses, tax refunds, or extra money toward your mortgage when you can.

But, Ernst noted, if you have substantial credit card debt, a car loan or a student loan, it may be more prudent to add extra payments to them instead of your mortgage. That’s because those other forms of debt often have higher interest rates.

2. Consider a home equity loan

You may also consider consolidating your debt by tapping into your home equity. You can either do a cash-out refinance, which gives you a new loan, plus cash in your pocket to pay off bills, or take out a home equity line of credit (HELOC), which works like a credit card.

If you are at least 62 years old, you may be able to take out a reverse mortgage. These loans allow you borrow against your home. The money doesn’t need to be paid back until the homeowner moves out, sells the property, or passes away.

“You should look at all the options, do the math and do what is best for you financially,” Ernst said.

3. Do a smart remodel to increase your home value

If you’re considering remodeling to increase the value of your house, consult a real estate professional to determine which types of projects and which styles raise prices in your neighborhood.

Doing it yourself may sound like a good idea, but you may actually save money by hiring an architect, interior designer, and contractor. Not only can professionals help you come up with stylish solutions that look great but don’t break the bank, they also can also help source affordable finishes and furnishings.

“Be sure the changes you make will improve, not over-improve, your house,” Ernst said. “It doesn’t make sense to spend $450,000 on a house that’s only worth $350,000, unless you are going to stay a long time. Selling and moving might be a better option.”

She noted that some costly repairs, such as roofs, don’t necessarily add big returns on your investment.

“It’s not like putting new tires on a car,” she said. “They don’t increase the value of the vehicle when you sell it.”

While you’re making improvements to your home, it’s a good idea to save your receipts. When you do sell your house, you may need them to counteract capital gains taxes.  

Single homeowners are eligible for a $250,000 credit. For married owners, it’s $500,000.

Here’s how it works. Let’s say you paid $500,000 for your house and sold it a decade later for $1 million. Your profit is $500,000. If you’re married, the $500,000 credit wipes out the $500,000 profit, and you are not subject to capital-gains taxes.

4. Take available tax deductions

A big perk of owning a home is that doing so can reduce your tax liability.

Homeowners can deduct state and local property taxes up to $10,000.

The interest you pay on your mortgage, up to certain limits, is another deductible expense. Mortgage points, the one-time payment you made to a lender to reduce the interest rate on your loan, are also deductible.

You must itemize your tax return to take these deductions. You may want to work with an accountant to take full advantage of all of your deductions.

5. Evaluate your home insurance

Homeowners may also want to review their homeowner’s insurance policies.

Shopping around for insurance may be able to save you money. If the goal is to decrease your monthly bills, you may want to opt to increase your deductible. That may be able to lower your payments.

Bundling your insurance may also save you money. For example, this could mean using the same insurance company for your homeowner’s and auto insurance policies.

Whichever of these strategies you decide to use, it could help you to better your bottom line.

Amber Ernst NMLS #406037

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Selling Your Home? What Homeowners Should Understand About Capital Gains Taxes

If you’re considering selling your home, you may be looking forward to a sizeable profit.

However, you may not want to spend it just yet. That’s because Uncle Sam could be entitled to some of that money. Depending on how much money you end up with from selling your home, it could be subject to capital gains taxes.

That’s why it’s important to understand how capital gains taxes could affect your proceeds and the steps you can take to minimize what you owe. 

What are capital gains taxes?

Capital gains taxes are taxes on the profits you receive when selling an asset, such as your home.

If you sell your home for more than you paid for it, this is considered a capital gain. But don’t panic just yet. You may not owe the Internal Revenue Service (IRS) capital gains taxes.

How long you have owned your home, your taxable income, and your tax filing status will determine what, if anything, you owe.

How capital gains taxes apply to home sales

The IRS allows homeowners to exclude up to $250,000 in capital gains for single tax filers. Married couples filing jointly can double that amount up to $500,000.

Any profit beyond these proceeds will likely incur the taxes. The taxes range from nothing to 15% or 20%, depending on your taxable income.

For example, if you are single and earn less than $47,025, you wouldn’t owe capital gains taxes for money received in 2024. If your income is between $47,026 but less than $518,900, your capital gains tax rate is 15%.

And if you’re bringing in more than $518,900, you would pay a $20% capital gains tax.

Married couples filing jointly wouldn’t need to pay the taxes if they made $94,500 or less. They would pay 15% on up to $583,750 and 20% on $583,751 or more.

The income limits increase in 2025.

But there’s more to it than that.

“It’s imperative that we also account for a tax filer’s MAGI, or modified adjusted gross income, to determine if the extra 3.8% NIIT, or net investment income tax, will apply,” said Vance Barse. He is the founder of Your Dedicated Fiduciary, a fiduciary wealth management firm that operates offices in Dallas and San Diego.

The NIIT applies if the total of your MAGI exceeds $200,000 for single filers and $250,000 for married filing jointly filers.

How to qualify for an exclusion of capital gains taxes on a home sale

To qualify for the capital gains tax exclusion, you must meet the following requirements:

  • The home is your principal residence
  • You have owned the home for a minimum of two years
  • You have lived in the house for two of the last five years prior to selling the home
  • You haven’t claimed a home sale capital gains exclusion on another home during the two years prior to selling the home

It’s important to note that the two-year window of living in the home doesn’t have to be consecutive, Barse said.

For example, you could buy a home and live in it for a year. The next year you could go on an around-the-world trip and rent out the property. If you lived in it for another full year after you returned from the trip, you would receive the exclusion when selling the home in the fourth year.

“One caveat is both spouses need to have been in that house two of the last five years,” Barse said.

However, there may be exceptions for active members of the military.

Also, if you shared the home with your spouse prior to their death, you may be able to increase your inclusion from $250,000 to $500,000 provided:

  • You sell the home within two years of your spouse’s death
  • You haven’t remarried at the time of the sale
  • You or your spouse did not claim the exclusion on another home within two years of the current house sale
  • You meet the two-year ownership and residence requirements.

How to avoid or reduce the capital gains tax on a home sale

The best way to avoid capital gains tax on a home sale is to meet the requirements for the exclusion.

Another way is to make and document any home improvements that you have made to the home. These expenses add to how much you paid for the home, which could offset any profits. 

“If there’s a $500,000 house that you purchase and you put $50,000 worth of improvements into the house, your basis is now $550,000,” Barse said. “If you sell that house five years later as a married filing jointly couple for a million dollars, you’re not going to owe any capital gains tax. The net gain would be $450,000 assuming there are no real estate costs.”

Capital gains taxes are not inevitable. If you’re concerned about capital gains taxes when selling your home, talk with an accountant or financial planner to determine what your tax liability could be.

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Seller Credits: Why Homebuyers Should Take Advantage of Them

Seller Credits: Why Homebuyers Should Take Advantage of Them

From the cost of a gallon of milk to the sticker prices on homes, it seems like everything is more expensive these days. That’s why savvy homebuyers should be on the lookout for little-known ways to save money, such as seller credits.

Seller credits are essentially financial assistance offered by home sellers to help buyers cover certain costs. They’re more common in a buyer’s market when sellers, both homeowners as well as builders, may have trouble getting to the closing table.

This type of seller concession is often used an incentive to attract potential buyers. When sellers offer the credits, which can be used to offset closing costs, taxes, loan fees, or other expenses, it can help a property stand out. 

“Seller credits are a valuable tool that can make the difference between a deal falling apart or closing smoothly,” said Bubba Peek, a real estate investor and owner of Bubba Land Company in Jacksonville, Florida. “For buyers, they reduce upfront costs, and for sellers, they make a property more appealing without slashing the asking price.”

How do seller credits work?

A seller credit is money that the seller agrees to give the buyer to help cover some of the costs of purchasing the property.  

“Instead of lowering the purchase price, the seller provides this credit to reduce the buyer’s upfront expenses,” said Peek. “It’s a practical strategy that benefits both sides, helping buyers save cash while ensuring the sale moves forward.”

Typically, the seller and buyer negotiate the seller credit amount during the offer process. It can also be offered after a home inspection, particularly if the inspection unearths costly problems that threaten to torpedo the deal.

“Once agreed upon, the credit is applied at closing,” said Brett Johnson, a real estate agent, investor, and owner of New Era Home Buyers in Denver. “For example, if a buyer negotiates $5,000 in seller credits, that amount is deducted from the funds they need to bring to the table.”

Why do sellers offer credits?

There are a number of reason sellers might offer a seller credit.

They can be used to facilitate a quicker sale, address needed repairs, or help a property attract attention, especially in a buyer’s market where there are more homes to choose from.

“Seller credits are rarely offered in a seller’s market because there is too much competition, and sellers typically don’t need to provide incentives,” said Cindy Raney, a real estate agent based in Westport, Conn.

“However, in a buyer’s market, where competition is lower, sellers may be more willing to negotiate on terms such as credits to attract offers or close a deal,” said Raney.

What is the maximum amount of seller credits?

There are generally limits on how much a seller can offer in seller credits to a buyer, depending on the loan type.

What can seller credits be used toward?

Seller credits can be used for a laundry list of expenses, some of which buyers may not have even known existed before they began looking for a home.

They include appraisal fees; title search fees; loan origination fees; inspection fees; homeowner association fees; and real estate taxes.

Real estate investor Peek added that in some cases, seller credits can be used to cover repairs or upgrades that a buyer intends to tackle after the purchase.

“However, they can’t be used toward a down payment and are capped at the buyer’s total closing costs,” said Peek

Strategies homebuyers can use to negotiate for seller credits

The best time to ask for seller credits is during negotiations.

Peek noted that he once had a client concerned about outdated appliances in a home. By pointing this out during negotiations, the clients secured $5,000 in credits. This covered replacements without complicating the closing process.

“In buyer-friendly conditions, homes that sit unsold for weeks are more likely to involve concessions,” said Peek. “Inspection reports also offer leverage. Repair needs can justify asking for credits.”

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Mortgage Myths Debunked: What Every Homebuyer Should Know

When it comes to homebuying, there’s no shortage of folks eager to provide advice.

Unfortunately, a lot of what’s said may be based on outdated information, half-truths, or false assumptions. And following the wrong advice can cost you time, money, and opportunities.

These are some of the most common mortgage myths debunked to help homebuyers navigate purchasing a property with confidence.

Myth 1: You need a 20% down payment

Myth: You need a 20% down payment to purchase a home.

Reality: If you’ve been waiting to save up 20% of the purchase price of a home, we have some good news. It’s not a requirement.

Sure, putting 20% down helps you avoid private mortgage insurance (PMI), but it’s far from the only option. In fact, many lenders offer programs with down payments as low as 3% or even 0%.

If you qualify for a U.S. Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) loan, you could buy a home with no down payment at all.

And thanks to various down payment assistance programs that can cover a down payment and closing costs, buyers may have more options than they realize. Contrary to popular belief, many of these programs don’t require you to have low income or live in specific areas.

“There are more down payment assistance and grant programs available than ever before,” said Ralph DiBugnara, a regional vice president for New American Funding based in Edgewater, N.J.

The bottom line: Don’t let the 20% myth hold you back. With the right guidance, you might be closer to homeownership than you think.

Myth 2: Pre-qualification guarantees loan approval

Myth: A pre-qualification for a mortgage guarantees loan approval.

Reality: Many people don’t understand what getting pre-qualified for a mortgage means.

While it’s a helpful starting point, it’s not a guarantee of loan approval. A pre-qualification simply gives you an estimate of how much you might be able to borrow based on basic financial information.

A mortgage pre-approval, on the other hand, is a more thorough process where a lender reviews your financial documents, such as pay stubs, tax returns, and credit reports. A pre-approval letter shows sellers that you’re serious about buying and have been vetted as a qualified buyer.

The bottom line: While pre-qualification can give you a rough idea of your budget, don’t skip the pre-approval step if you’re ready to make an offer on a home.

Myth 3: A 30-year, fixed-rate mortgage is always the best loan

Myth: A 30-year, fixed-rate mortgage is always the best loan.

Reality: The 30-year fixed-rate mortgage is one of the most popular home loan options, and for good reason. This type of mortgage typically offers more offers stability and predictable monthly payments. However, that doesn’t mean it’s always the best choice for everyone.

If you’re looking to save money on interest and can handle slightly higher monthly payments, a 15-year mortgage might be a better fit. These loans typically offer lower mortgage rates than 30-year loans. Over time, you’ll pay significantly less in interest, and you’ll build equity faster.

Alternatively, adjustable-rate mortgages (ARMs) might work for buyers who plan to move or refinance before the rate adjusts. ARMs often start with a lower initial rate, which can make them attractive for short-term homeowners or those expecting changes in their financial situation.

However after a set period of time, the rate adjusts which can lead to higher mortgage payments.

The bottom line: The key is to match your mortgage type with your financial goals and how long you plan to stay in the home.

Myth 4: Don’t pay points to buy down a mortgage rate

Myth: You shouldn’t pay points to your lender to buy down a mortgage rate.

Reality: You’ve probably heard that paying points—also known as buying down your interest rate—isn’t worth it. But this depends on your financial situation.

Paying discount points can lower your interest rate upfront, giving you a lower monthly payment and saving you money over the life of the loan.

Typically, one point costs about 1% of your loan amount and lowers your mortgage rates by a quarter of a percentage point.

“The short-term benefit is an increase in buying power, and the long-term benefit is paying less interest over the life of the loan,” said DiBugnara.

This strategy can be especially helpful in today’s market, where higher interest rates can affect affordability. Plus, in most cases, the cost of the points is tax-deductible.

The bottom line: Buying points can be a smart move if you plan to stay in your home long enough to break even on the upfront cost.

Myth 5: You shouldn't ask sellers to help pay closing costs

Myth: Buyers shouldn’t ask sellers to contribute to closing costs.

Reality: It’s a common misconception that you can’t request that sellers help with closing costs, especially in a competitive market. They may fear that sellers won’t accept their offers if they ask.

While it’s true that sellers had the upper hand for much of the recent housing boom, the market is shifting, especially in some parts of the country. If a home has been sitting on the market for a while, sellers may consider helping with a buyer’s closing costs to secure the sale.

The bottom line: Seller concessions can cover some or all of your closing costs, making it easier to manage upfront expenses. Don’t be afraid to negotiate—it could save you thousands of dollars.

Ralph DiBugnara NMLS # 19269