For many Americans, homeownership has always been a part of the “dream”, alongside financial stability and freedom. We make it through school (accruing debt in the process), hit the job market and quickly realize that the ability to save money to qualify for a mortgage takes a backseat to paying bills and staying afloat. 

 When it comes to owning a home, it has almost become a distant dream for younger generations, due to accrued student loans and a seemingly endless cycle of debt. How is it possible to get ahead, funnel income into a savings account, save for a down payment, and provide for your family all whilst living paycheck to paycheck? 

 “Between 2018 and 2020, the share of Millennials in the United States who expect to always rent their home increased from 10.7 to 18.2 percent “, according to a survey done by the Statista Research Department in 2021. 

 Knowledge is Power

 One of the biggest barriers for first time home buyers is a lack of knowledge about the home buying process, and the options available to help finance a home. Should we have classes as we’re growing up in school about financial health, taxes, and the importance of maintaining good credit? Absolutely. Didn’t it feel great to get that first credit card as a young adult? It was usually a store card too, those savvy salespeople always got you at the register. Little did you know, that decision would follow you for decades. 

 Hopefully, future generations will have access to education prepares them for these choices. For now, let’s break down the biggest barriers that younger generations are facing in our current housing market.

 Student Loans

 “Today’s millennials are drowning in student loan debt. After our research, we can now say with certainty that student loan debt is making it difficult to buy a home,” said NAR Vice President of Policy Advocacy Bryan Greene. However, 2017 brought about a significant change in how mortgage lenders calculate debt to income ratios in regards to student loans. It used to be that they would look at an overall percentage of total student loan debt, but have since broken it down to what the individual pays towards their debt on a monthly basis. This is significant because it allows many more buyers to qualify for loans who would normally not be able to when looking at the grand scope of debt. 

 Although financially it still is a massive barrier, many lenders and government agencies are working towards solutions to help first time homebuyers get into a home. Even if you are paying down student loans and a mortgage simultaneously, it can set you up for success later on when it comes to building equity (the difference between what a property is valued at and what you owe).

 Down Payments

 Saving for a down payment is by far one of the biggest barriers to purchasing a home. It is important to understand why saving is so difficult, and for many it’s because we are constantly using our cash capitol to pay off debts. Sure, if you are dedicated to the idea of being a homeowner, there are ways to cut down spending in other areas that can put you slightly ahead. However, many of us don't even start saving for a down payment because it feels impossible to save enough. The good news is...there are many options that do not require a traditional down payment. 

 Many lenders are offering lower down payment loans and help with closings costs. An FHA loan is designed to benefit those who don’t have a large lump sum to put down, sometimes as little as 3%. State Employees Credit Union here in NC offers 100% financing options for those who work for the state in some capacity, or have family who do so. Additionally, local credit unions like Champion Credit Union have great 100% financing rates that are competitive with national lenders. The best thing to do is to be connected to a local lender, so they can advise you on what route makes the most sense for your situation.  We have made some serious magic happen for home buyers in recent years, and sometimes all it takes is being connected to the right resources. 

 Other Barriers

 One of the most obvious barriers is the condition of the real estate market itself. Currently we are in a strong seller’s market. Bids far over asking price, all cash offers, and taking on properties “as-is” doesn’t feel like favorable conditions for first time buyers, and to an extent that is true.

 However, mortgage rates are low, and with the right Realtor advocating for your best interests there are still many opportunities for you to secure a home. Make the decisions that are in the  best interest for you and your family. Home ownership is about stability, and if home values are higher than you can afford, it’s best to hold off. However, in comparison to renting, homeownership has many added benefits that make it attractive, even if you are buying in a seller's market. If you feel intimidated entering the market, perhaps consult a local mortgage lender to see if there are ways to boost your buying power in the meantime.

 Those who are Self-Employed have a harder time qualifying for loans as it’s not as simple as providing a W2, they are responsible for providing at least 2 years tax returns. The biggest issues arise when there are differences in the income those who are self-employed think they make versus what their tax returns show. Record-keeping is the name of the game for self-employed buyers, and an experienced Realtor, Lender, or Financial Advisor can help you figure out your best practices. 

 Lastly, we all know about credit history. The number that seems to define us financially wherever we go. Apps like the Experian app are a massive tool towards understanding what is currently affecting your credit, disputing claims, and boosting your credit by connecting utility bills and other routine payments. Credit scores can improve drastically over a year with very little effort. 

 Overall, the best ways to understand what types of programs are out there for your unique situation, and if the dream of owning a home is even a possibility, is to connect with a knowledgeable Realtor and Mortgage Lender. With homeownership being one of the securest ways to build wealth and stability, do not wait to start educating yourself using the professionals who do this everyday. 

Resources for First-Time Home Buyers: 

State Employees Credit Union - Offers 100% financing

Champion Credit Union - Offers 100% financing

Experian - Free Credit Score check, and programs to help raise your credit score

Eskritt Group - Team of Realtors who can help guide you, no matter your financial situation

Posted by Greg Eskritt on


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