6 obstacles to homeownership—and how to overcome them

Here are six common challenges homebuyers have reported facing*, along with practical solutions to help you overcome them:

• 1. High cost of living

  With housing prices, low inventory of homes and the cost of living going up, you may be finding it harder to afford a home in your community. This can, understandably, lead to frustration. Approximately 46 percent of prospective homebuyers feel that the cost of living has gotten too high.*

  Solutions

  • Look into moving to more affordable areas within a short distance from where you want to live in. (Searching for the cheapest place to buy a house? Read our list for more information.)
  • Research government programs that provide financial assistance to eligible homebuyers.
  • Focus on paying down existing debt and increasing your income, where possible, to free up more funds for your housing budget.

  How much could your monthly mortgage payment be?

  Use our calculator to find out.

• 2. Saving for a down payment

  It can be helpful to make a large down payment on a house, if you have the funds available. But in reality, the median down payment for a first-time homebuyer is closer to nine percent. If you don’t meet your down payment savings goal, don’t worry. You still have options.

  Solutions

  • Ask your Guild loan officer about low and no down payment home loans, with down payment minimums ranging from 0 to 3.5 percent.
  • Also ask your loan officer which down payment assistance programs or grants you may qualify for.
  • Set up a dedicated savings account with automatic contributions to build your down payment faster.

• 3. Qualifying for a mortgage

  Need help buying a house with poor credit? Concerned you won’t meet income requirements? It can still be worth meeting with a loan officer to find out where you stand. Many homebuyers aren’t aware that they already qualify. For others, getting professional guidance may help to improve your financial situation.

  Solutions

  • Ask your Guild loan officer about MyPath2Own, our homeownership preparedness program designed to help homebuyers with debt, income or credit issues get ready for a mortgage.
  • Consider a co-signer or look into government-backed loan options, such as FHA loans, that may be easier to qualify for.
  • Work on improving your financial health by paying off smaller debts, reducing credit card balances and avoiding new debt before applying.

• 4. Lack of affordable homes

  Home prices have risen in many markets, leaving 35 percent of would-be homebuyers struggling with a lack of available homes within their budget.* While prices do go up and down, homes are expected to cost more next year than they do today.

  Solutions

  • Ask your Guild loan officer about using a Mortgage Credit Certificate (MCC), which can help reduce your federal tax liability and increase take-home income to make homeownership more affordable.
  • If you want to stay close to friends and family, expand your home search radius to include surrounding suburbs where prices may be lower.
  • Consider purchasing a smaller or older home that you can renovate over time or a different property type, such as a condo or manufactured home, that may better fit your budget.

• 5. Poor credit score

  Your credit score shows how you’ve managed money in the past. A higher score could help you qualify for a better mortgage rate, making homeownership more affordable. A lower rate can decrease your monthly mortgage payment, saving thousands of dollars over the life of your loan. Roughly 35 percent of nonhomeowners have concerns about their credit.*

  Solutions

  • Make payments on time whenever you can; timely payments have a major impact on your score.
  • Pay off balances and increase your income, if possible, to decrease your credit utilization ratio.
  • Check your credit report for errors and dispute any inaccuracies that could be negatively impacting your score.

• 6. Higher mortgage interest rates

  It’s true that mortgage rates have risen from the record lows seen during the pandemic. But those rates were the exception, not the rule. Today’s higher mortgage rates are still below the recorded historical average. Even so, a higher rate can impact affordability, increasing your monthly mortgage payment.

  Solutions

  • Ask your Guild loan officer about using a rate lock, protecting against rate increases for 120 days.
  • Look into a temporary buydown, which can lower your rate—and monthly payment—for the first few years of homeownership.
  • Work to improve your credit score to qualify for the lowest interest rate available.