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How to Afford a Pricier House in the Neighborhood You Love

When Danielle and Jimmy returned to their home state after three years in Germany, they spent the next six months looking for their first home.

“Location was so important to us. We got used to walking everywhere while we were in Germany. Grocery stores, restaurants, beer gardens and pubs were all within walking distance of our apartment. We wanted to find a neighborhood like that,” explains Danielle, an employee relations attorney.

They found the perfect neighborhood: Bay View, Wisconsin. They also found a house in a perfect location, right across from a park, with a lovely view of Lake Michigan.But the house itself wasn’t so perfect: it needed about $20,000 worth of renovations. And the sale price was on the high side of their price range.

“We looked at other homes in the neighborhood that were cheaper and in better shape. But we kept coming back to this one. It was in the perfect spot. And when we found out there is a beer garden in the park in summer, it was a done deal!” Danielle says.

They successfully closed on the house in January and spent a month painting, installing a new kitchen floor and remodeling the master bath before they moved in.

So how did Danielle and Jimmy manage to buy a more expensive home and have money left over to fix it up? With direction from their loan officer, here’s how they did it:

1. They were pre-approved before starting the house hunt, so they knew their price range.

2. They used conventional financing with private mortgage insurance, which allowed them to put down 5 percent instead of 20 percent. Their mortgage payment is higher, but still within their monthly budget.

3. The lower down payment made it possible to buy the more expensive home.

4. Putting less money down also allowed them to keep cash for the renovations.

For more information on how to purchase a home with conventional financing and a low down payment, check out the articles and videos on this website, created especially for first-time home buyers: readynest.com.

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