As the housing market shifts, the traits of the typical first-time homebuyer also change. Many factors impact who buys homes, including economics, housing supply, migration patterns, cultural influences and personal choice.
At Newrez, we are experts in responding to homebuyer needs. Buying a home is typically a major investment, and many aspiring homeowners may wonder whether they have the finances to reach their goals. The good news: Affordable loan options exist.
In this article, we’ll get a picture of how homebuying is changing. Then, we’ll explore affordable loan options.
Generational Shifts in Homeownership1
Homebuying habits are evolving—and so are the buyers themselves. According to a 2025 report from the National Association of Realtors®, first-time buyers made up just 24% of all home purchases between July 2023 and June 2024. That’s down from 32% the year before, marking the lowest share since 1981.
Here’s a quick look at how different generations are showing up in today’s market:
- First-Time Buyers Are Getting Older: The median first-time buyer age reached 38, an increase from 35 the previous year, suggesting that buyers are waiting longer to make their move.
- Millennials Are Still in the Game: Millennials accounted for 29% of all buyers. Many are juggling student loan debt, but they’re still finding ways to step into homeownership. Among them, 71% of younger Millennials and 36% of older Millennials were buying their first home.
- Gen Z Is Lagging Behind: Only 3% of homebuyers are Gen Z, suggesting an affordability barrier faced by younger generations. They and younger Millennials tend to purchase older homes than other generations.
- Older Buyers Are Still Active: Boomers made up the largest share of homebuyers at 42%, with many of them expressing they bought to be closer to friends and family. Gen Xers had the highest income of any homebuying generation at an average of $130,000, and bought the highest share of multi-generational homes at 21%.
Affordability Pressures2
For many aspiring homeowners, affordability may still be a major hurdle. In 2024, the average buyer needed an annual income of $126,700 to comfortably afford payments on a median-priced home of $412,500. That’s based on a 31% debt-to-income ratio and a 3.5% down payment on a 30-year mortgage. Just three years earlier, in 2021, that same buyer would’ve needed only $79,300 to afford a similar home. That’s a big shift.
A 2025 report from Harvard University’s Joint Center for Housing Studies highlights a few key trends:
- Because of affordability barriers, first-time homebuyers were older and more affluent in 2024 than in years past.
- First-time homebuyers rely more on help from friends and family to cover the down payment for a home.
- The overall homeownership rate dropped in 2024 for the first time in eight years, with the largest drop among those 35 years old and younger.
Affordable Loan Products for First Time Homebuyers
If you’re a first-time homebuyer and you’re worried you may not have enough saved up for a large down payment, you should know that options exist to help you reach your homeownership dreams. Newrez carries all of the following options:
Federal Housing Administration (FHA) Loans
With an FHA loan, qualified borrowers may be able to put down as little as 3.5%.
- Flexible credit and debt-to-income requirements
- Allows the use of gift funds for the down payment
- Requires upfront mortgage insurance premium (UFMIP) or annual MIP (Upfront MIP is typically 1.75% of the loan amount, while annual MIP is paid monthly as part of your mortgage payment)
U.S. Department of Agriculture (USDA) Loans
These loans are designed for rural and small-town buyers with an income 115% below the area median.
- Qualified borrowers may not have to make a down payment
- Qualified borrowers may receive competitive interest rates and flexible terms
- Requires an Annual Guarantee Fee, which is .35% of the remaining loan balance paid monthly as a part of your mortgage payment
- Requires an Upfront Guarantee Fee, which is 1% of the loan paid at closing or rolled into the loan
Veterans Affairs (VA) Loans
VA loans are available to eligible Veterans, Active-Duty servicemembers, some reservists and qualified surviving spouses.
- Certificate of Eligibility (COE) required
- Qualified borrowers with full entitlement usually don’t have to make a down payment
- Mortgage insurance not required
- Credit-flexible with stable income requirement
- May include a VA funding fee
Fannie Mae HomeReady®
This program is also tailored to low-to-moderate income households.
- Qualified borrowers may put as little as 3% down
- Borrowers may be able to use gifted funds for down payment
- Requires homebuyer education for first-time buyers
- May require mortgage insurance
Freddie Mac Home Possible®
This program offers flexibility on income guidelines and qualifying property types.
- Qualified borrowers may put as little as 3% down
- Borrowers may be able to use gifted funds for down payment
- Requires homebuyer education for first-time buyers
- May require mortgage insurance
Achieve Homeownership in a Changing Landscape
Many hopeful homebuyers may be facing obstacles in finding a home and obtaining a mortgage, but a path to homeownership still exists. If you’re searching for a way to secure your homeownership dreams, a Newrez loan expert is ready to walk you through your options.
References:
1 2025-home-buyers-and-sellers-generational-trends-04-01-2025.pdf
