It's getting harder and harder for young people to buy a home. Home prices and interest rates are on the rise while supply continues to dwindle.
Those factors, coupled with the financial strain of student debt, have left many unable to save enough for a down payment or afford a monthly mortgage.
But some are getting it done. From extreme-savings strategies to scoring a mortgage for 100% of the home price, four Gen Z homebuyers told Insider about the unique ways they financed their first home purchase before age 25.
While not all of their financial paths to homeownership are available to everyone, their journeys can serve as a guide and spark ideas.
Here are some tips from their first home purchases.
Saving for a down payment was 'untenable.' Instead, I looked for 100% financing options and plan to refinance later.
After Daniel Greene, 22, fled his tumultuous childhood home with his two sisters a few years ago, he wanted to buy a house to move into when he and his fiancée got married, he said.
But after putting all of his money towards rent — $1,250 per month — the 2020 college graduate didn't have much saved to put toward a down payment on a house, he said.
"It's the American dream. It's something you're supposed to do," he said. "To be honest, though, it's unattainable, it's completely untenable."
"How am I supposed to save up $20,000?" he added. "I don't come from money."
It's a challenge facing his entire generation, said Greene, who works in finance making about $85,000 per year.
Through his bank, North Carolina's State Employees' Credit Union, he found a way to do so. He bought a new-construction two-bedroom home for the amount of his loan last year, he said.
The bank offered a floating-rate mortgage, with an initial interest rate of 3.14%, that lent on 100% of the $202,800 house. He had a credit score of 700 when he took out the loan, and the rate will be adjusted in two years.
Since the adjustable nature of the loan means interest rates could hit 14% when it does get reevaluated, Greene plans to refinance the debt with a fixed-rate mortgage before then, hoping for a rate of 3% to 5%.
Credit unions are not-for-profit member-owned banks whose members have some kind of geographic, religious, educational, or occupational affiliation. Many of these banks lend up to 100% of the home's value depending on the price.
The National Credit Union Administration has a map and locator on its website to find a credit union near you. Insider's personal finance team has also laid out the best credit unions of March 2022.
Since I made under $90,000, I was able to qualify for a state program to help first-time homebuyers. I scored a 2.38% interest rate and $7,500 to put toward my closing costs.
What Emajja Bowen, 24, loves most about her Atlanta condo are its floor-to-ceiling windows. They were a must-have in her search.
By the time the condo was listed in August 2020, she had almost given up looking. But then she saw her dream home and decided to put in an offer.
The 2020 master's graduate wrote a letter to the seller telling him what buying a home in the state's capital would mean to her. The letter worked. Bowen closed on the $274,000 home in the fall.
Bowen was also able to qualify for a state program, Georgia Dream, that helps Georgians become homebuyers.
The program provides first-time homebuyers, buyers who have not owned a house in over three years, or homebuyers looking to buy in specific areas of the state with low mortgage rates and financial assistance to make the move, according to the program's website.
The state caps the program to those making $90,000 or under. Brown, a consulting analyst, said she just made the cut. Georgia Dream provided her with $7,500 toward closing costs and financed a mortgage with a 2.38% interest rate, compared with 3.07%, the average mortgage in October when Bowen bought the condo.
Many states offer programs to help first-time homebuyers secure favorable terms, finance a down payment, or otherwise assist them. The mortgage information provider HSH has outlined what each state offers on its website.
Insider's personal finance team has outlined 11 programs that help first-time homebuyers get a mortgage as well as how to find first-time homebuyer programs in your state to help with a down payment, closing costs, and taxes.
To get a better mortgage, I used monthly payments for Netflix and Hulu to boost my credit score.
Grace Gabriel, 23, closed on a $505,000, three-bedroom townhouse in Laurel, Maryland, in February. But her road to homeownership started with a speed bump.
In August, Gabriel, still in her first year as an analyst at Accenture, felt financially stable enough with a salary of $92,000 to buy a home. But a loan officer said she needed a longer and more robust credit history to apply for a mortgage.
So Gabriel put herself on a "financial diet." She started with "cutting out carbs", like her Achilles' heel: online shopping. She deleted shopping apps from her phone and started tracking every dollar of her spending in an Excel spreadsheet.
"This was a goal that I wanted, so I was going to be very serious about it," she told Insider.
She used those savings to pay off debts, including outstanding tuition bills.
Gabriel also found ways to boost her score using her spending habits. She signed up for a service through the consumer credit bureau Experian that let her count monthly Netflix and Hulu payments toward her overall FICO score.
Through YouTube videos detailing financial advice, Gabriel discovered the Chime Credit Builder card. She appreciated the features designed specifically to help those building credit: no credit check, no annual fees, and no interest.
Opening a second card expanded her available credit, which in turn improved her credit utilization rate. Gabriel set a personal goal of keeping that number under 30%, something that same loan officer would compliment her on months later.
In the end, she was able to boost her credit score to 726, an increase of 50 points, which helped her lock in an interest rate of 3.9% for her mortgage.
Looking back, Gabriel never doubted her drive to make her goals a reality.
"I'm not someone who's good at 'no,'" she said. "When someone tells you 'no,' make that into new opportunities."
To read the full story, check out Business Insider.
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