Nearly two-thirds of millennials report they are saving for their first home, according to the second annual First-Time Homebuyer Pulse, a recent release from TD Bank®.
However, while they are saving, many are still struggling to save enough for a down payment, as 74 percent reported that a down payment is their biggest obstacle when it comes to affording a home. Thirty-five percent of millennials are putting down less than 20 percent on a home, slightly higher than the overall average of one-third of homebuyers.
Down payments seem to be a struggle across all age groups, according to the report. Sixty-five percent of all survey participants said they haven’t purchased a home yet because they don’t have the down payment.
“For many consumers, a 20 percent down payment is a major barrier to homeownership,” said TD Bank’s® Head of Pricing and Secondary Markets Scott Haymore. “It’s often difficult to save this much cash, especially for young adults saddled with substantial student loan debt. First-time buyers are shopping for low-down payment mortgage programs, which allow buyers to put as little as 3 percent down.”
In addition to saving for a down payment, millennials are also trying to pay off debt and hold down a steady job. Nineteen percent of millennials hope to have help from family and friends in affording a down payment. Millennials are also eager to pay off their mortgage sooner rather than later, as 33 percent are looking to pay it off in a 15-year period. While the majority of millennials are seeking a home that is ready to move into, millennials are more apt than other generations to choose a fixer-upper or newly-constructed home. Overall, the top features millennials desire are attractive design, a nice backyard or pool and proximity to schools or childcare, according to the report.
“It’s encouraging to see millennials thoughtfully prepare to enter the housing market,” added Haymore. “With today’s affordability programs, owning a home doesn’t have to be a dream, it can be a reality.”
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