Millennials Are Ready to Buy Homes—But on Their Terms

Millennials lead the way in first-time homebuyer stats and appear ready to move forward with this important milestone. But a few roadblocks still exist. home buyers and the millennial generation
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Key Takeaways

  • Millennials are now the largest group of homebuyers
  • Student debt continues to weigh on the would-be first-time homebuyer
  • Millennial homebuyers are most interested in securing a low monthly payment

Much has been said in recent years about how millennials won’t—or can’t—buy homes. However, the reality is that millennials are buying homes. In fact, according to the most recent Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), first-time homebuyer stats point to millennials as those most likely to buy homes.

But even if millennials are interested in buying homes, there are still some roadblocks to homeownership. Here are some of the challenges, as well as some first-time homebuyer tips, for millennials looking at how to buy their first house.

Challenges Facing the First-Time Homebuyer

The NAR report points out that millennials make up the largest share of homebuyers (37%), but the generation still faces challenges when it comes to actually moving forward with a purchase.

  • Debt. The biggest barrier to moving forward with a home purchase, according to TD Bank’s First-Time Homebuyer Pulse survey, is student loan debt. According to the survey, 41% of Americans who graduated in the last 20 years put off purchasing a home because of student loan debt.
  • Idealism. Another challenge: 84% of survey respondents said they'd rather delay buying a home than settle for something that doesn’t meet their ideal.
  • Steep home prices. Even first-time homebuyer financing can’t make up for high prices in the neighborhoods where millennials hope to settle. Many millennials who delay making the jump point out that they have great amenities where they are now—even if they’re renting. As a result, 70% of those in TD Bank’s survey said they have high expectations and aren’t ready to give those up when they buy. Quality of life is important to many would-be millennial homebuyers.
  • Uncertainty. Another issue facing homebuyers is the potential uncertainty surrounding the 2020 election. Almost half of respondents (47%) pointed out that they were concerned about policy changes, and 57% of potential buyers were worried about the future of the economy.

Millennials Hoping to Buy on Their Own Terms

When considering first-time homebuyer financing options, millennials are hoping to find a situation that meets their expectations. Even with 30-year mortgage rates near historic lows, some buyers aren’t ready to jump. According to the TD Bank survey, only about 20% of millennial respondents were interested in securing a low mortgage rate. Instead, the most important financial priority cited by respondents was getting the first-time homebuyer financing that leads to the lowest possible monthly payment.

Even though some millennials hesitate to jump on the first-time homebuyer train, there is still a strong perception among them that buying a home is a worthwhile investment. Millennials still associate home ownership with wealth (61%), and 83% believe that it’s part of the American dream.

If millennials can figure out how to buy their first house on their own terms—getting in the neighborhood they want at a price point they can afford—there’s a chance we might see an even greater number of them taking the plunge and buying homes.

First-Time Homebuyer Tips

Here are a few things a first-time homebuyer can do to increase the chances of successfully navigating the home-purchase process.


Review how much you can afford.

Like the millennials in the TD Bank survey, it might be a good idea to take a step back and review how much you can afford. A first-time homebuyer loan can help you get the financing you need, but it might not always make sense to choose a bigger mortgage just because a bank will approve it. Carefully consider your situation and determine what monthly payment you can afford. Many experts suggest that your housing payment be no more than 30% of your monthly income.

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Save up for a down payment.

Even though saving up for a down payment wasn’t high on the list of priorities for millennial respondents in TD Bank’s survey, the reality is that a bigger down payment can reduce costs. It’s sometimes possible to get better deals on 30-year mortgage rates, as well as owe less overall.

It’s possible to use a Roth IRA first-time homebuyer withdrawal to help with a down payment as well. But before making a first-time homebuyer IRA withdrawal, make sure you understand the rules and recognize that you might face an opportunity cost for not letting that money grow toward your retirement.

There are also down-payment assistance programs that might be able to help you come up with a bigger down payment. Carefully vet these organizations and consider all your choices before moving forward.


Shop around for first-time homebuyer financing.

The TD Bank survey indicates that millennials trust their mortgage lender as a credible source about the process, and 52% of buyers want to start their mortgage application in person. Working with a good mortgage broker might offer some important insights and help you learn about first-time homebuyer strategies.

Shop around for the best 30-year mortgage rates, and consider an adjustable-rate mortgage if it’s appropriate for your situation. Look carefully at your circumstances and consult with a professional to determine what first-time homeowner’s loan might be best for you.

Bottom Line

Millennials now make up the largest pool of homebuyers as well as the largest pool of first-time homebuyers. But although they’re increasingly getting ready to become homeowners, millennials are looking to do so when it makes sense for them.

By taking a little time and carefully considering your priorities, it’s possible to be a savvy first-time homebuyer who gets into an affordable house with the potential to provide years of enjoyment and stability.


Key Takeaways

  • Millennials are now the largest group of homebuyers
  • Student debt continues to weigh on the would-be first-time homebuyer
  • Millennial homebuyers are most interested in securing a low monthly payment
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