Starter Home or Forever Home: How to Choose Your First House

The hardest questions are the ones with no right or wrong answers. Here's a tough one that you'll face as a first-time home buyer: Should you buy a starter home to become a homeowner as soon as possible or wait until you can save enough to afford a forever home?

Some buyers get stuck here, but you don't have to. Going back to the basics — your budget and goals — will help clear the way to move forward.

Here's what to know and how to think through the decision.

What is a starter home?

A starter home is a condominium, townhome or single-family home that a first-time buyer can afford but may outgrow. Typically small and modest, starter homes serve the basic needs of many homeowners and are generally on the lower end of the price range in their local real estate market. They can be older homes, fixer-uppers or brand-new, entry-level houses.

A starter home probably doesn't feature every amenity you dream of having someday, but it's a good-enough home for the foreseeable future.

Some buyers opt for starter homes with the goal to move up to bigger, more expensive or better located homes later. Others end up owning their "starter homes" for the rest of their lives.

» MORE: Tips for first-time home buyers

What is a forever home?

A forever home is one that will meet your needs for many years. Forever homes come in all sizes and styles. There's no standard for what a forever home looks like or how much it costs because everyone has a unique vision of how and where they'll live in the decades to come. A forever home could be a fixer-upper that a buyer plans to renovate into a dream home in their favorite neighborhood, or a rambling house where a couple who's planning a family can raise their future children.

Forever homes aren't necessarily luxurious, but they usually provide room to grow in a neighborhood where you want to sink roots.

» MORE: Calculate how much house you can afford