Should You Buy a Large House or Buy a Small House and Build an Addition?

When searching for your next home, one of the first things you’ll have to decide is what size it should be. You might dream of owning a large house, but that might not fit your budget, or it might not be necessary right now. Under some circumstances, you’ll be better off buying a small house, then adding on later.

Think About What You Can Afford 

A large house will be expensive. You’ll have to make a significant down payment if you want to avoid private mortgage insurance. You’ll also have high monthly mortgage payments, and you’ll have to pay for property taxes, homeowners insurance, maintenance and repairs. You might not be able to afford all those costs right now, but you might expect your income to rise in the coming years. If so, it can make sense to buy a small house and plan to expand in the future, when you’re more financially secure. If you buy a small house, live there for several years, and build equity, you’ll be able to use some of that money to pay for an addition. A home equity loan or line of credit can make it possible for you to have your dream home without struggling to make ends meet.

Consider Your Family’s Current and Future Needs

A small house might serve your family fine now and for the next few years. You might plan to have children in the future, but you might not know when you want to expand your family or how many kids you want to have. You might not be sure if you want to have children at all. Buying a small home can give you flexibility.

Think About How Building an Addition Would Impact Your Life

Any major home renovation or remodeling project will be disruptive. Building an addition will likely mean that you’ll be unable to use certain parts of your house, possibly for weeks at a time. You’ll have to deal with noise, dust, times when the electricity or water get shut off and loss of privacy if you work from home and contractors are around during the day. Constructing an addition can be particularly stressful if you have young kids. They probably won’t fully understand what’s going on, and the stress might make it hard for them to sleep and negatively impact their behavior and performance in school. You’ll also have to figure out how to keep your kids away from tools and other safety hazards. You can avoid all those stressors by purchasing a large house that will fit your family’s current and future needs. That way, you won’t have to worry about building an addition later.

Choose the House That’s Right for Your Family

Buying a big house can help you avoid the stress of building an addition in the future, but it might create unnecessary financial stress now. Think about your personal circumstances and find a home that will work for your family and your budget.