How Do People Afford Houses?

When house prices and your income don’t seem to fit together, it’s reasonable to wonder how everyone else is managing it. Usually it comes down to a few things that aren’t obvious from the outside, and then also, of course, the obvious: most people aren’t affording it. They’re either saddled with increasing debt, or running into the same barriers to entry (not enough saved, not enough income, credit scores that aren’t good enough).

But there are some tips: a lot of buyers put down far less than 20%. FHA loans allow 3.5% down, and down payment assistance programs cover part of that for many first-time buyers. Two incomes also carry what one can’t, and if you don’t have a partner’s income, rent from a unit you own can play a similar role. And many of the people who seem to have afforded a lot bought a property that helps pay for itself.

That last one is the part most people never hear about. I bought a duplex, lived on one side, and let the rent from the other side cover part of the payment, using the same loan a first-time buyer would. It’s house hacking, and it just doesn’t get talked about much.

See the math: compare rent vs. buy vs. house hack for your situation.

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