2022 Stats on First Home Buyers | The bank rate
Despite housing market conditions, the number of first-time home buyers continues to rise. Here’s a look at first-time home buyers today and resources to help you as you embark on your first home purchase.
Statistics of first-time buyers 2022
- In 2021, 34% of homebuyers were first time buyers, up from 31% in 2020.
- The typical age of a first-time buyer is 33 years old.
- Sixty-five percent of first-time buyers are primarily motivated by the desire to own their own home.
- Since 2018, the average down payment for first-time home buyers has consistently hovered between 6% and 7%.
- Twenty-nine percent of first-time home buyers cite “saving for a down payment” as the most difficult part of the home buying process.
- In 2021, 28% of first-time home buyers applied a gift or loan from family or friends for their down payment.
- Among homebuyers aged 23 to 31 (Millennials), 49% say student loan debt hinders their ability to save for a home. The same is true for 44% of homebuyers aged 32-41 (older millennials).
- Among homebuyers aged 23 to 41 who made sacrifices to buy a home, the most common was to reduce their spending on “luxury or non-essential items.”
- Among homebuyers aged 23 to 41, the most common reason for a mortgage denial was an insufficient debt-to-income ratio (DTI), followed by a low credit score.
- Only 11% of homebuyers aged 23-31 and 11% older aged 32-41 contacted a bank or mortgage lender as the first step in the home buying process. Most often, the first step for these groups was to search for listings online.
- Sixty-six percent of first-time buyers are white, 14% are Hispanic, 11% are Asian American, and 9% are black.
- Just 8% of homebuyers ages 23-31 and 8% older ages 32-41 say ‘getting a mortgage’ is the most difficult part of the home buying process a house.
- Among single homebuyers (9% of all homebuyers), 21% are younger millennials.
- Fifty-one percent of older millennials have at least one minor child living with them.
Sources: The evolution of the profile of first-time buyers: 1997-2017, Joint Center for Housing Studies, Harvard University; 2022 Generational Home Buyer and Seller Trends Report and 2021 Profile of Home Buyers and Sellerss, National Association of Realtors
Getting a Mortgage as a First-Time Home Buyer
As a first-time home buyer, start by estimating the price of the home you can afford, taking into account your income and other debts, as well as the amount of your down payment and down payment. monthly mortgage. Although many mortgage lenders allow you to borrow at a higher ratio, it’s best not to spend more than 28% of your income on housing.
Before applying for a mortgage, review your credit reports and credit scores. Your credit score has a significant impact on the mortgage interest rate you will receive, so if your score needs improvement, now is the time to improve it. This includes measures such as paying off existing debt and avoiding new loans. If you find an error on any of your reports, contact the credit bureau as soon as possible to fix it.
Once your score is in shape and you have an idea of what you can afford, start shopping for lenders. You can choose to start with your bank, but don’t overlook other types of lenders like credit unions or online lenders. In addition to finding the lowest possible rate, it’s equally important to compare fees and your overall experience.
Resources for first-time home buyers
There are many loan and first-time home buyer assistance programs that can help lower the cost of buying a home:
- Down payment assistance – Many down payment assistance programs offer a second mortgage to help pay the down payment and closing costs in addition to the first mortgage to buy the home. This second mortgage can be a low interest, deferred payment or conditional repayment loan.
- home ownership subsidy – If you are a low- or moderate-income borrower, you may be eligible for a first-time buyer grant (free money). To qualify, you generally must meet income and purchase price limits as well as credit score requirements.
- Mortgage interest deduction – Depending on whether it is better to itemize or take the standard deduction, you may qualify for the mortgage interest deduction on your annual tax return.