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Younger Home Buyers Are Working Side Hustles to Make That Happen. Should You?

By Maurie Backman,

2023-03-15

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There's a reason so many potential home buyers have been struggling to break into the market. Not only have U.S. home prices been quite elevated over the past few years, but mortgage rates are also up these days. That's created a major affordability crunch.

Now generally speaking, it's a good idea to bring a 20% down payment to the table at a minimum when buying a home. This isn't always a requirement, and some mortgage lenders will accept less money down at closing. But making a 20% down payment helps you avoid private mortgage insurance (PMI), a costly premium that can make your ongoing housing costs even more expensive.

But coming up with a 20% down payment isn't easy at a time when property values are higher. And so if you're getting closer to that mark but aren't quite there yet, then getting a side hustle could really work to your benefit.

A second job could make homeownership more attainable

A recent survey by Compare The Market found that prospective home buyers across different age groups are looking at getting a side hustle as a means of being able to purchase a home. In fact, potential buyers aged 18 to 24 cited that as their top way to save for a home, while those aged 25 to 44 cited it as their second most popular option for coming up with those funds.

Of course, the upside of getting a side hustle to save for a home down payment is not having to cut back on spending to such an extreme degree to afford that purchase. Let's say you're $12,000 shy of being able to buy a home in your target market, and you really want to become a homeowner in a year's time. If you're able to hold down a side gig for the next 12 months and earn $1,000 a month from it, you won't necessarily have to slash your spending and give up things you love to make that happen.

More: Check out our picks for the best mortgage lenders

A side hustle could benefit you even once you purchase a home

Working a side gig could help you get closer to your down payment goal sooner. But if you're going to get a side hustle, don't just plan to dump it the moment you hand over your down payment.

Many new homeowners find that their costs are higher than anticipated, between surprise repairs and the general cost of maintenance being difficult to nail down. If you're willing to hang onto your side hustle for your first year of homeownership, you might make that transition a lot easier on yourself financially.

In fact, you may even decide to permanently keep your side hustle upon becoming a homeowner. You never know when your costs like property taxes or homeowners insurance might rise unexpectedly. Having a second stream of income could make increases like that easier to manage. And the less financial stress you have, the more likely you are to actually be able to enjoy your new home to the fullest.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy .

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