You’ve decided to move out of your parents’ or landlord’s place and begin your own home owning journey. A starter home is a great place to begin this journey—let’s look at some things to consider if you’re shopping for one.

What counts as a starter home?

A starter home is a term used to differentiate a property from a forever home. You buy a forever home to live in for the rest of your life. Forever homes often have room to grow into—and a higher price to match.They are ideal for anyone who wants to settle down somewhere for good.

A starter home is meant to be the first house in a lifetime of home-owning, with its equity used to purchase your next home as your needs evolve. They tend to be smaller, with fewer amenities and might need modifications or repairs. Still, the lower price means you’ll save on mortgage payments, property taxes, and even upkeep and utilities. If you’re open to moving later but want to start building equity as soon as possible, a starter home could be right for you.

Qualifying for a loan and figuring out a budget

Unless you can afford to pay for a house in cash—which is unlikely if you’re considering a starter home—you’ll probably need a mortgage. Lenders will consider your income, current debts, credit score and history, and other factors when you apply for a loan. You’ll also need enough money for a down payment—having 20 percent of the total home price typically means you won’t have to pay for private mortgage insurance (PMI), although it’s possible to get a mortgage with less.

As you go into this process, you should have an idea of what monthly payment you’re comfortable with, so you don’t overstretch your finances. This will help you come up with your price range.

Shopping for a starter home

Once you know your budget, it’s time to start shopping! Check out listings online and speak with a real estate agent about the neighborhoods, schools, and other local amenities that matter most to you.

Looking for a starter home might mean compromising on some featuresconsider whether you can live without things like a yard, pool, or updated kitchen. Maybe these will be part of your dream home, but you’ll be fine without them for a few years. Think about what you can’t compromise on. Maybe you plan on having kids in the next year or so, and a home with at least three bedrooms is a must.

Understanding maintenance, fees, and other costs

Every home has additional expenses on top of the purchase price. You’ll likely have to pay closing costs, which include things like the appraisal, title search, and attorney fees. Beyond moving costs and mortgage payments, you’ll have to pay for utilities, property insurance, and maintenance along with any upkeep expenses (like homeowner association fees) associated with the property; it’s all part of being a homeowner.

This can also be a good time to consider life insurance—the death benefit from a life insurance policy can ensure your heirs can continue paying the mortgage, even if you pass away unexpectedly. People buying a starter home often opt for term life insurance, which offers financial protection for a set number of years. You can get a term life insurance policy that matches the mortgage term—or even a bit longer if you plan on upgrading in five or ten years.

The bottom line

You’ve seen what’s needed to buy a house and understand the costs and responsibilities associated with homeownership. If a starter home is right for you, it’s time to hop onto that property ladder and start climbing—with diligence and a bit of good luck, you could be building equity before you know it.