There’s a long-held myth that you need to be a university graduate and earn $80,000+ a year to break into home ownership.  
 
It’s a belief that couldn’t be further from the truth. In fact, new data from HomeStart Finance shows that “blue-collar workers” - who traditionally earn less than white collar professionals when they start their working life - are just as likely to buy a home as someone who has studied at uni.
 
The surprising statistic may be attributed to the fact that the large majority of blue collar workers attain their qualifications - Certificate III and IV – in six to 12 months or learning the trade through an apprenticeship, which means they are out in the workplace sooner, earning money for a deposit.
 
This is in contrast to many white collar professionals – such as accountants, lawyers and those working in marketing, who will spend at least three years at university completing a degree and may have limited income while they are studying.
 
Plus, a four-year Bachelor Degree costs between $18,000 and $30,000 on average, so uni graduates may also leave university with a significant level of debt. Although, history shows that longer-term, they have a higher level of income compared to Certificate III and IV graduates.

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So if you are on a moderate to low income, here’s some tips on how to break into home ownership sooner:

1. Choose carefully – the good news is South Australia is one of the most affordable places in the country to buy a home. By carefully selecting the type of home and suburb you want to live in, you will reach your home ownership goal a lot sooner. Consider moving to suburbs further out to access cheaper housing, or think about buying a smaller home with fewer features. Building or buying a home or apartment off the plan can also save you thousands, as can purchasing a home and land package, particularly if you access special deals that many builders and developers offer. Remember, your first home doesn’t have to be your forever home – it’s simply a foot in the door of the property market.

2. Go with a low deposit lender – Post-GFC, most lenders require a 20% deposit when buying a home, which can be reduced to 5% if you pay many thousands in Lenders’ Mortgage Insurance (LMI) (a type of insurance that protects the lender, not you). On a $400,000 home, a 20% deposit will mean you have to contribute $80,000 out of your own savings, or around half of that if you take LMI. Look for a lender like HomeStart Finance, where you can buy a home with as little as 3% deposit, which equates to just $12,000 on a $400,000 home.

3. Access grants and other assistance - Depending on the type of home you are planning to purchase, you may have access to a range of grants or assistance programs that offer discounts or lump sums you can put towards the purchase. Do your research to find out what you’re eligible for. The SA Government currently offers grants of up to to $15,000 on new homes. Make sure you go with a lender who will accept grant amounts towards the deposit, fees and charges, as this will lessen the amount you need to contribute upfront. HomeStart Finance also offers assistance of up to $10,000 towards upfront costs if you earn less than $42,500 per annum.  

4. Avoid paying LMI -  Search for a lender who doesn’t require Lenders Mortgage Insurance (LMI). LMI is a type of insurance that many lenders charge when you borrow more than 80% of the property's value to protect them should you default on your home loan. Reducing the cost of LMI style insurance can save you thousands in upfront costs.  

5. Get free information– Consider attending a free home buying seminar to explore all of the options available to you when buying a home. Alternatively, visit a broker to explore your options, and to help you select from the thousands of home loan products in the market. 

The key take-out is anyone can be a home buyer, whether you’re a tradie, nurse, teacher or accountant. Saving for a home deposit is all about discipline and having your eye set on a goal.
 
No matter what your occupation or income is, the important thing is getting into home ownership as soon as you can. Once you’re in and building equity, you’ll be in a much stronger financial position.