A starter home is the relatively straightforward name given to low-cost homes purchased by first time home buyers. These are usually one or two bedroom homes that represent the extent of what a first time home buyer can afford, and they are often older homes that are not in prime areas. Most people purchase a starter home with some combination of their savings and mortgage financing. A starter home might either be a home in a new development or one in an older part of town. A good starter home might be just enough space for a young, single person or for a small family. These homes are usually rather modest in exterior appearance but may be nice on the inside. They are not meant to be permanent homes for most people as most will move out of these homes and into something bigger and better after saving for a few more years.