For many first-time homebuyers in 2025, starter homes feel almost mythical—something everyone talks about but few can actually find. In hundreds of cities across the U.S., entry-level homes now exceed $1 million, pricing many buyers out before they even start. Even in regions where prices are more moderate, competition remains intense due to low inventory and high demand.

And yet, there’s a surprising bright spot:
Starter home sales rose 4% year-over-year as of June 2025, proving that determined buyers are still finding ways to break into the market.

How are they doing it? They’re adopting new strategies, expanding their definition of “starter home,” and using modern tools to navigate one of the toughest markets in recent history.

Below are the top approaches first-time homebuyers are using to purchase their first property in today’s challenging environment.

1. Casting a Wider Net—Choosing Affordability Over Zip Code

With prices soaring in major cities, buyers are redefining where they’re willing to live. Many are shifting their search to:

• Outer suburbs with lower price points

• Up-and-coming towns with new development

• Communities with fewer bidding wars

This flexibility is a game-changer. Areas once overlooked—like small mill towns, commuter-friendly suburbs, or communities undergoing revitalization—are becoming hot spots for first-time homebuyers who prioritize square footage and affordability over proximity to downtown.

2. Expanding What Counts as a “Starter Home”

Today’s buyer isn’t just looking for a traditional single-family house. Instead, they’re choosing:

• Condos and townhomes

• Multifamily properties (live in one unit, rent out the other)

• Manufactured or modular homes

• Fixer-uppers that need cosmetic updates

• Smaller homes with expansion potential

The shift is practical: buyers want something they can afford now, even if it’s not their forever home. With rising rents across the country, owning something is often better than waiting for the perfect option that may never come.

3. Getting Creative With Down Payments

With home prices climbing, first-time buyers are tapping into a mix of options to bridge the affordability gap:

• Down payment assistance programs at the federal, state, and local levels

• Employer housing incentives

• Gifts or shared equity from family

• Low-down-payment mortgage options, including 3%-down conventional loans and FHA loans

These tools help buyers enter the market sooner, even when saving 20% feels impossible.

4. Using Technology to Compete More Strategically

In a competitive market, speed and preparedness matter. First-time buyers are increasingly relying on:

• AI-driven home search platforms that alert them the moment a new listing hits

• Virtual tours to screen properties quickly

• Automated valuation tools to evaluate whether a home is priced fairly

• Mortgage pre-approval apps for faster offers

These tech tools are helping buyers compete with seasoned investors and cash buyers.

5. Partnering With Local Lenders for More Flexible Financing

When affordability is tight, the mortgage itself becomes a powerful bargaining chip.

More buyers are exploring:

• Temporary rate buydowns

• Adjustable-rate mortgages (ARMs)

• First-time buyer mortgages with discounted rates

• Community lending programs with relaxed income limits

A well-structured mortgage can make the difference between renting for another decade and buying now.

6. Considering Co-Buying With Friends or Family

The concept of co-buying is gaining traction. Rather than waiting until they can afford a home alone, some buyers are choosing to purchase property with:

• Friends

• Siblings

• Parents (who may eventually use the home as a retirement property)

With clear legal agreements and shared expectations, this strategy helps buyers enter high-cost markets that were previously out of reach.

7. Choosing Homes With Rental Potential to Offset Costs

First-time buyers are increasingly choosing properties that allow them to generate income, such as:

• Homes with rentable basements or ADUs

• Multifamily homes

• Properties zoned for short-term rentals

• Houses on large lots with expansion options

This extra income can help cover mortgage payments and accelerate wealth-building—especially crucial when buying at today’s high prices.

Starter Homes Are Scarce, but Not Impossible

In 2025’s competitive and high-cost housing market, starter homes may feel like an endangered species—but they’re not extinct.

Yes, prices are higher than ever, and competition is fierce. But many first-time buyers are proving that with creative financing, flexible expectations, and strategic planning, breaking into the market is still possible.

As long as buyers stay informed, innovative, and adaptable, purchasing that first property—no matter the size or type—remains within reach.

Matt Witte strives to be the best realtor in Andover, MA.

Any questions about real estate, reach out to Matt Witte, Andover Realtor, MA