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Buying your first house: Tips from millennial homeowners

Instead of purchasing a house, Harris and his girlfriend had a new house built in 2017 — and they used Florida’s first-time homebuyer program to help afford it.

The assistance program allows first-time homebuyers with qualified income and purchase-price limits a grant to be used toward a down payment and closing costs of up to $15,000. For every year that passes, 20% of the grant is forgotten. After five years, the loan will be satisfied.

Qualifying for the program also qualified him for a Federal Housing Administration home loan that required a 3% down payment, Harris, who was 24 at the time, told Business Insider.

They put down a $1,000 deposit to reserve the lot, while the grant covered their $7,750 closing costs and $6,150 down payment. The remaining amount of the grant went toward the principal of the home loan, Harris said.

“Since we only put 3% down on the loan, we elected to pay a monthly mortgage insurance of $109,” said Harris, who oversees online and warehouse operations for a local interior-design firm. “The way to get out of paying mortgage insurance is putting down 20% on the home loan. We plan on staying in this house five years or less. Paying mortgage insurance for five years will cost $6,450. Paying the 17% more at closing would have cost $34,680.”

Their mortgage is currently $1,503 a month.

Harris recommended creating a savings plan. Figure out how much you will be able to afford, and keep in mind mortgage amounts are based on the length of the loan, the interest rate, and the amount of owner equity, he said.

Build a spreadsheet to track your expenses, then get prequalified for a loan so you can crunch all the numbers and make an educated decision on purchasing a home, he said.

“The key to being successful when purchasing your first home is purchasing a home that is significantly less than what you qualify for,” he said.