One of the most critical factors in maintaining a strong real estate market is the steady presence of first-time buyers. Their participation supports the entire housing ladder, giving existing homeowners the ability to sell and move on to their next property.
Without first-time buyers purchasing entry-level homes, the real estate market stagnates. Upsizers get stuck, empty nesters can’t downsize, and demand softens across all price points. That’s why today’s news is encouraging: according to Realtor.com, 23% of Millennials plan to buy their first home within the next six months — up from just 15% in a previous survey last September.
It’s a clear sign that first-time buyers are feeling more optimistic, even in the face of rising mortgage rates and affordability challenges.
First-Time Buyers Remain Cautious but Motivated
Despite the growing interest, many first-time buyers are still holding back, waiting for conditions to improve. According to Realtor.com, 63% of younger buyers are waiting until mortgage rates fall below 5% before they make a move. That benchmark, however, may not come anytime soon.
Freddie Mac recently reported that the average rate for a 30-year fixed mortgage sat at 6.81% in mid-June. The Federal Reserve continues to maintain a policy rate between 4.25% and 4.5%, resisting external pressure from lawmakers and the National Association of Realtors to ease borrowing conditions.
Understandably, first-time buyers are rate-sensitive. When rates push past 7%, only 2% of potential Millennial buyers say they’d proceed with a deal. For many, waiting feels like the safer move — but delaying can also mean missing out.
First-Time Buyers Must Understand Their Buying Power
To take advantage of future opportunities, first-time buyers should get a firm grip on their finances today. Understanding your budget and borrowing power is key. Even if you’re not ready to buy just yet, doing the groundwork now will give you a competitive edge later.
1. First-Time Buyers Should Create a Realistic Budget
Housing costs — including mortgage, property taxes, insurance, and maintenance — should be no more than 25–28% of your monthly take-home pay. Keeping your budget in check ensures you’re financially comfortable and prepared for emergencies.
Also, don’t forget to set aside cash for unexpected repairs or homeownership expenses. A solid financial cushion reduces stress and protects you from future setbacks.
2. First-Time Buyers Need to Monitor Their Credit Score
Your credit score directly affects the mortgage rate you’ll be offered. Lenders use this number to determine your creditworthiness. The better your score, the more favorable your loan terms.
Start by checking your score with agencies like Experian, Equifax, or TransUnion. If your score is on the low side, take steps to improve it — pay down debt, make timely payments, and avoid opening new credit lines in the months leading up to your home purchase.
3. First-Time Buyers Should Get Pre-Approved Early
A mortgage pre-approval shows you’re serious and financially qualified. It also gives you a clear idea of what you can afford. This is especially important in competitive markets where multiple offers are the norm.
Having a pre-approval letter in hand makes your offer stand out — and might even be the deciding factor for a seller choosing between two similar bids.
First-Time Buyers Need a Downpayment Strategy That Works
Down payments are a major concern for first-time buyers, but there are ways to prepare strategically.
4. First-Time Buyers Should Aim for a 20% Downpayment
Putting down 20% helps you avoid Private Mortgage Insurance (PMI), which can add hundreds to your monthly mortgage payment. But if saving 20% isn’t feasible, that’s okay — many lenders accept down payments as low as 5%.
Also, plan for closing costs, which typically add another 2–5% of the home’s purchase price. These fees include appraisal, title insurance, legal fees, and taxes. Knowing these figures ahead of time helps avoid last-minute surprises.
First-Time Buyers Are Key to Market Recovery
With 68% of Americans saying they’re not interested in moving anytime soon, the real estate industry is counting on first-time buyers to restore momentum. Their return to the market can breathe new life into communities and jumpstart a healthy buying and selling cycle.
Millennials, now aged between 27 and 44, are entering their prime homebuying years. Many have stable careers, growing families, and a strong desire for homeownership — even if financial roadblocks have delayed that dream.
Fortunately, there are more tools and resources than ever before to help first-time buyers succeed: low down payment loans, government grants, first-time buyer programs, and credit education services all offer a helping hand.
Final Thoughts: First-Time Buyers Can Still Thrive in Today’s Market
While interest rates and affordability challenges remain, the determination of first-time buyers is a hopeful sign for the real estate industry. With preparation, smart budgeting, and expert guidance, first-time homeownership is still within reach.
If you’re one of the many first-time buyers thinking of entering the market this year, start preparing today. Your dream home could be closer than you think.
