Sometimes the toughest questions have no clear-cut answers. As a first-time home buyer, you’ll face a challenging dilemma: should you opt for a starter home and become a homeowner sooner, or wait until you can afford your dream forever home?

Many buyers find themselves stuck at this crossroad, but there’s no need for you to feel the same. By going back to the basics – your budget and goals – you can pave the way to a clearer decision and move forward confidently.

Let’s delve into what you need to know and how to approach this crucial choice.

Started Home: What Is It?

A starter home refers to a condominium, townhome, or single-family home that is affordable for first-time buyers but may become too small as their needs grow. Typically, these homes are modest and compact, meeting the basic requirements of homeowners and generally falling on the lower end of the price spectrum in the local real estate market. They could be older homes in need of renovation or brand-new, entry-level houses.

While a starter home may not offer all the amenities you aspire to have in the future, it serves as a suitable dwelling for the foreseeable future. Some buyers choose starter homes with the intention of eventually moving to larger, more expensive, or better-located properties. On the other hand, some individuals end up residing in these “starter homes” throughout their lives.

Forever Home: What Is It?

It’s a place that will fulfill your needs for countless years, a sanctuary of memories and dreams. Forever homes come in all shapes and sizes, each one as unique as the vision of its inhabitants. There are no rigid standards for what a forever home should be, for it is a reflection of your aspirations and the life you envision for the future. It might be a humble fixer-upper, awaiting your personal touch to transform it into a dream abode in your beloved neighborhood. Or perhaps it’s a sprawling house, ready to embrace a growing family and witness the cherished moments of raising children.

Forever homes need not be opulent, but they do offer the space to blossom and flourish, nestled in a community where you yearn to put down roots.

Choosing Between a Starter Home and a Forever Home

Deciding between settling for a starter home or waiting for a forever home requires careful consideration. Let’s explore the benefits and drawbacks of each option:

Starter Homes


Starter homes are usually more affordable, allowing you to save for a down payment in less time. This means you can start building home equity sooner compared to waiting for a forever home. Ideally, when you’re ready to upgrade, you can sell the starter home and use the gained equity towards your next purchase.


Starter homes often become inadequate as your needs change. You may get married, have children, or require more space for entertaining, hobbies, or home offices. Upgrading to a new home would involve selling or renting out the starter home, dealing with closing costs on another mortgage, and the stress and expenses of moving.

Forever Homes


A forever home offers the advantage of settling in for the long haul. You can enjoy ample space and, barring unforeseen circumstances, not worry about moving for a significant period. You have the freedom to customize the house to your liking, without the need to consider potential buyers in the near future.


Forever homes often come with a higher price tag compared to starter homes. Saving for a down payment may take longer, potentially delaying the purchase and the opportunity to build equity. By the time you’ve accumulated more funds, home prices and mortgage rates may have increased, making a forever home seem out of reach once again.

By carefully weighing the pros and cons of both options, you can make an informed decision that aligns with your current and future housing needs.

Tips for Making an Informed Decision

When considering whether to purchase a starter home or a forever home, here are some key factors to bear in mind.

Spend within your means

Begin by determining your affordability. Let this be your guiding principle. As a general rule, it is recommended to allocate no more than 28% of your gross monthly income to home-related expenses, and no more than 36% to debts, which includes your mortgage, credit cards, and other loans. To gauge how much you can afford, take into account your monthly income, expenses, credit profile, and savings for down payment and closing costs. NerdWallet’s home affordability calculator can assist you in getting started.

Plan for long-term ownership

While shopping for a forever home inherently involves long-term planning, purchasing a starter home also requires a forward-thinking approach. The longer you own a home, the greater the likelihood that rising property values and accumulated equity will surpass the costs associated with buying and selling, such as mortgage closing costs and real estate commissions. Selling too soon may subject you to capital gains tax if the value of the home appreciates. Typically, you can exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains on real estate. However, this exclusion usually disappears if you owned the home for less than two years or did not reside in it for at least two years within the five-year period prior to the sale.

Consider resale potential

It is prudent to consider long-term value when purchasing any home, particularly a starter home that you plan to sell after several years. Well-maintained homes in desirable locations have a good chance of appreciating in value. Collaborate with your real estate agent to identify homes with strong resale potential. Additionally, think about the value you can add to a home. Purchasing a fixer-upper can be a smart way to secure a bargain, but ensure you comprehend the extent and cost of renovations before making an offer.

Maintain a realistic perspective on “forever”

A home that will meet your needs indefinitely is akin to a perfect dream home, and it can be a challenging goal to achieve, especially for first-time buyers. Release some of the pressure associated with the purchase. In reality, “forever” in the context of real estate is not truly forever. Jobs change, families expand or shrink, and personal preferences evolve. Instead of fixating on a perfect home, think long-term and focus on finding a good enough home that suits your needs. It’s important to keep in mind that homes often fall on a spectrum between basic starter homes and forever homes. So, approach your search with an open mind and enjoy the process.

Contact Sword Mortgage To Learn More About Your Options

Call (770) 757-5750 or complete our online form to speak with a loan expert at Sword Mortgage to get help navigating your options and find a loan that fits your needs today.