5 Reasons to Buy Less House Than You Can Afford


Last Updated: July 27th, 2021

Guest Post by Holly Welles

Homebuyers with a larger budget are often interested in a larger property. They believe it's in their best interest to buy a house with more yard space, more rooms, and more storage. While this may seem preferable to a smaller property, it's almost always better to buy less house than you can afford.
In truth, having more of something doesn't mean you'll make the most of it. It's common among homeowners to spend a majority of their time in a few select rooms, leaving the rest of their living space unoccupied. The reading nook they planned to use only gathers dust, despite their initial intentions.

So what should you keep in mind during the homebuying process? How will a smaller property help with your financial situation? We'll walk you through everything you should know on the subject, looking at the top five reasons to purchase only as much as you need when searching for a home.

1. Maintenance responsibilities

Your maintenance costs will vary depending on the size of your property. With a smaller home, you won't need to spend as much on tasks like landscaping. A larger home may present a problem, as these higher maintenance costs will compound and build up quickly over time.

It's also crucial to give thought to your long-term situation. Once you retire, you'll still need to manage your property and maintain its condition. This may prove difficult if you have limited mobility, and something as simple as shoveling snow or raking the leaves could take considerable effort.

2. Home repairs and upgrades

Repairs and upgrades are inevitable for any homeowner. Whether you fix a fence or attend to a leaky faucet, your property is an ongoing investment that demands your time and money. Long after you purchase your home and pay off your mortgage, you'll still have expenses to manage.

With that in mind, it's vital to plan for expensive repairs and upgrades. It’s inevitable that you’ll need to replace windows, fix HVAC systems, and replace a roof every 10–15 years, for example, and the costs of the renovation could seem overwhelming. Owning a smaller home will make it easier to save money and address these issues as they present themselves.

3. More opportunities to save

If you're planning for children, you likely see the appeal in a larger property. Your kids will run and play without the restrictions of a smaller space, roaming your backyard with the family dog. This freedom is important, of course, but you also have to consider your children's future comfort.

More specifically, you may have to help your kids through college. It's far less challenging to contribute to their college savings when you spend less on mortgage payments and maintenance costs. While your children need room to grow, they also need financial support.

4. Mortgage and PMI payments

Many of today's homebuyers can't afford a traditional 20 percent down payment. Some of them choose to pursue an FHA Loan, an accessible option with a low down payment. Unfortunately, these new homeowners need to pay extra for private mortgage insurance, or PMI, on top of their regular mortgage payments.

It's an additional burden which can place strain on your financial situation. If you plan on buying a larger house with an FHA Loan, you should study the risks involved with that purchase. Before you proceed with an FHA Loan, it's essential to learn more about what the commitment entails.

5. Emergency preparedness

When searching for a new home, you'll need to confront a few questions that may feel uncomfortable to think about. If you were to lose your job, suffer an injury, or undergo a similar hardship, would you have enough money to pay the bills? Could you accommodate the expenses of a larger home?

If the answer to those questions is "No," you should look for a property which is well within your price range. Beyond the typical benefits you can expect, you'll have more resources to manage an emergency. A sudden illness or unexpected termination won't cause as much turbulence in your life.

Buying the right amount of house

As you move forward, give thought to the advantages of a smaller property. It's often better to buy less house than you can afford, even if you're willing to spend more on a larger home. Regardless of your eventual choice, you can feel confident knowing you made an informed decision.

Holly Welles is a real estate writer and the blogger behind The Estate Update. You can find more of her tips on homeownership, finance, and investing on Twitter.

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