These are the best 10 metro areas for first-time home buyers — and how to make it more affordable no matter where you’re buying

Home buying demand has fallen amid high mortgage interest rates, after bidding soared during the pandemic. That dynamic has made some markets more attractive to first-time home buyers for 2023. Zillow Report Released this week.

The real estate site found metro areas to be the “best opportunities” for first-time buyers, with more affordable rents, less competition and higher inventory of homes for sale.

“The affordability barrier is very tough,” said Matt Hackett, manager of operations at Equity Now, a mortgage lender in Mamaroneck, New York, that operates in five states.

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One of the biggest challenges has been the sharp increase in interest rates within a short period of time, explained Erica Davis, production branch manager at Guild Mortgage in Myrtle Beach, South Carolina.

Mortgage interest rates have more than doubled since early January chain of rise From the Federal Reserve to curb inflation in 2022. These rates have moderated recently, reached 6.41% last week,

Meanwhile, median home sales prices are higher year-over-year, reaching $454,900 during the third quarter of 2022, According to Federal Reserve Bank of St. Louis.

Still, some markets may be more affordable for buyers on a budget, Zillow’s report shows.

However, affordability could be a concern, experts say first time home buyers There may be more options than they expect.

“First-time home buyers always have a knowledge gap,” Hackett said. “They’re not really sure how much they can afford, and they’re not really sure how much do they need for a down payment,

For example, many first time home buyers are not aware of mortgage for veteransThat doesn’t require a down payment or a Federal Housing Administration loan with 3.5% down, he said.

You may also qualify for a so-called conventional mortgage backed by Fannie Mae or Freddie Mac, with a down payment of up to 3%.

However, loans with low down payments come with mortgage insurance and higher interest rates, which can be lower later, experts say. You will also have a larger monthly payment with a larger mortgage.

Davis said that low down payment mortgages can also preserve savings for future household expenses. “There’s less stress if they’re able to close and still have some money in their pocket,” she said.

Depending on your income and location, you may also be eligible for first-time home buyer grants or programs run by state and local governments to help cover your down payment and closing costs. “It’s definitely a good option,” Hackett urges buyers to speak with a local mortgage specialist familiar with the programs in their area.