How to Move Out of Your Parents’ House With Little or No Money

If you are in your twenties (or even into your early thirties) and still living with your parents, you’re not alone. In 2023, nearly half of all US adults aged 18-29 lived with their parents or other family members. 

One major reason for this: the housing market. 

It’s expensive to live on your own, and rising home prices coupled with high interest rates don’t make it any easier. The median age for first-time homebuyers is now 36 years old, up by three years since 2021. 

Moving out of your parents’ house and into your own home might seem like a distant dream, but with a little planning and the right resources, there are steps you can take to make that dream a reality sooner rather than later.  

In this article, we’ll go over six actions you can take now that will get you closer to moving out of your parents’ house, even with little or no money saved up.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

1. Get creative with your down payment

The biggest concern for most first-time homebuyers is making a down payment. This is a fair concern because a sufficient down payment can be quite a bit of money. However, you don’t necessarily need to grind and save for years just to come up with the funds.

It might be a delicate conversation, but many first-time home buyers ask family for help with a down payment. You may find they’re more willing and able to help than you expected, but that they didn’t want to make any assumptions by offering.

One thing to note is that there are rules about paying back a gifted down payment. If you get down payment help from a family member, it usually has to be in the form of a gift that you never repay. 

If this isn’t an option for you, there are a good number of down payment assistance (DPA) programs available as well. You could potentially qualify for thousands or even tens of thousands of dollars to help you make a more substantial down payment with far fewer years of saving.

In most cases, you’ll apply for DPA through your lender when you apply for a mortgage loan. But it’s a good idea to understand your options ahead of time, so you’re well prepared and can set a realistic home-buying budget based on any assistance you might qualify for. 

Find out if you qualify for down payment assistance 

Stairs Financial streamlines your access to down payment assistance, making it easy for you to connect with a trusted local lender and compare the loan and assistance programs you may qualify for, all in one place.

Learn more about your down payment assistance options.

2. Build (or improve) your credit

Your credit score impacts your mortgage interest rate, as well as whether or not you get approved for a mortgage. So, before you really get into the nuts and bolts of finding a new home, it’s important to understand where your credit stands. 

If need be, now is the time to start building or improving it. 

If you have no credit, the simplest way to start is to get a credit card, use it, and pay off the total balance each month. If you’re concerned about piling up credit card debt, it’s best to start with a card that has a small credit limit. 

Pick one or two monthly bills and use your card only to pay those bills, then pay off the card balance in full at the end of each month. Even one purchase a month on your card is enough to build credit history.

Paying off your balance each month shows a good payment history on your credit report and keeps your credit utilization low, both of which impact your credit score in the long term.

Things are a little more challenging if you have bad credit (versus little or no credit). The simplest solution is to make your payments on time and work to reduce your total debt. Pay extra on your credit cards and loans, if you can, and avoid taking on additional debt. It may not be exciting, but it works.

There are other ways to fix your credit to buy a house, which can help speed up the process, but you can’t go wrong starting with the basics.

3. Make a realistic home-buying budget

Working out your home-buying budget is a bit of a balancing act between how much you can afford and how much a lender is willing to loan you. Even though you might feel comfortable allocating half of your monthly income for housing expenses, your lender will probably disagree. 

Most lenders prefer you spend 35% or less of your monthly income on your mortgage payment. This is called your front-end ratio and is a portion of another calculation called your debt-to-income level (DTI) where lenders account for all of your monthly debt as a percentage of your monthly income. 

Many personal finance experts also recommend this same 35% front-end ratio and not just because mortgage lenders prefer it. A 35% front-end ratio helps you maintain the financial flexibility to take on other debts, if you need them, and absorb unexpected expenses.

Based on a 35% front-end ratio, you can multiply your monthly income by 0.35 to calculate your ideal home-buying budget. 

Monthly income x 0.35 = 35% front-end ratio

Once you know your front-end ratio, you can begin to work out how much house you can afford.  Speaking to a mortgage lender, and potentially getting a mortgage pre-approval, will give you the most accurate information. But it’s a good idea to have a ballpark number in hand before you meet.

4. Research affordable locations

Moving to a more affordable location can have a much bigger impact than you might expect. Housing prices vary quite widely from state to state, and even from city to city within the same state. 

Take Texas, for example. If you’re wondering how much house you can afford in the Lone Star State, the answer is: it really depends. 

The median home price in Austin is currently $543,380. At this price, your monthly mortgage payment will be somewhere in the ballpark of $2,960* for principal and interest (not including taxes and insurance). 

In Houston, the situation is very different. If you purchase at the median home price of $263,147, you can expect a monthly mortgage payment of approximately $1,840.  

Bottom line: you can significantly increase your home-buying power by buying in a more affordable area.

Learn more: Buying a home in Texas? Find out if you qualify for Texas down payment assistance and first-time buyer programs. 

*Monthly mortgage figures based on the median home price with a 20% down payment and 7.25% interest on a standard 30-year mortgage.

5. Find a real estate agent

Even if you’re not quite ready to move out and buy a house right now, it’s wise to start searching for a real estate agent sooner rather than later. 

It’s important to work with a real estate agent you trust. It will likely take you a bit of research and a few conversations to find someone that you really want to work with. 

Treat finding a real estate agent like prep work for buying a home, rather than as the last step. Start early, so you can build a relationship with your realtor and help them understand your needs before you start the home-buying process. 

6. Find a lender and get pre-approved for a mortgage

If you’re planning on getting down payment assistance, you need to work with a lender who is approved to participate in your chosen DPA program. So, just like finding a real estate agent, you can treat finding a lender as prep work rather than a last step.

Do keep in mind that a pre-approval is only good for 30, 60, or 90 days, depending on the lender. If you get an early pre-approval as part of your budgeting process, you may need to go through the process again closer to closing time.

Either way, once you have a solid home-buying budget in mind, a plan for your down payment, and a realtor, you pretty much have your ducks in a row. Finding a lender and getting final pre-approval puts you in prime position to start housing hunting and making offers. 

If you need help finding a lender who works with down payment assistance, Stairs Financial can help. Stairs connects you with trusted local lenders who work with down payment assistance programs, and lets you compare the loan and assistance programs you may qualify for, all in one place

Learn more about your down payment assistance options.