1. Pay Off Student Loans and Other Debt

What’s the biggest challenge facing millennial homebuyers? Student loans. Over 44.2 million Americans are paying off a national student loan debt of $1.48 trillion. In 2016 alone, the average student loan debt was $37,172 per graduate!⁽²⁾

As if student loans weren’t enough, consumer debt has postponed the home-buying dream of many millennials.⁽³⁾ In fact NAR reports that, second to student loans, the two expenses that delayed saving for a down payment were credit card debt (32%) and car loans (32%).⁽⁴⁾

Buying a house is the most expensive purchase you’ll make. As such, it’s important to be debt-free before securing a mortgage. If you have any debt, get on budget and use the debt snowball to pay off those loans. Only then will you be ready for the next challenge: the down payment.

2. Save for the Down Payment

Another tip for millennial homebuyers may not be that surprising. Most of us don’t pay cash for our first home.

98% of millennials buy with a mortgage. ⁽⁵⁾ 

That’s why it’s important to have a strong down payment. This helps offset costs by lowering your interest rate and helping you pay off a mortgage more quickly. We recommend 10–20% for a down payment. Furthermore, if you have 20% tucked away, you’d bypass private mortgage insurance (PMI). This is an additional insurance requirement lenders impose on most first-time homebuyers.

If you’re struggling to save for the down payment, you’re not alone. In fact, one-fourth of millennial homebuyers accept monetary gifts from friends or relatives. ⁽⁶⁾ According to Builders Online,⁽⁷⁾ millennials sometimes tend to save for more than seven years for a downpayment.

Be patient and stay the course if you’re attempting to save. Start with a clear plan. Know how much house you can afford.

3. Stand Out in a Competitive Market

If you’ve already paid off your student loans and saved for your down payment, great work! The next step is to get into the housing market. In the past few years, the housing market has had a shortage of sellers. This raised the prices of homes and caused competition among buyers. Gen Xers are typically buying more established homes rather than starter homes. Effectively, your competition is other millennials and, likely, your parents.

Yep, that’s right. Just as millennials are finally moving out, empty-nesting baby boomers are downsizing into the homes preferred by millennial homebuyers. You might find yourself in bidding wars with buyers who have bigger budgets and more home-buying experience.

We have prepared a comprehensive free, no-obligation, no agent hassle e-book:
“Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just click here

your lender has looked over your finances and decided that you can cover the down payment and the mortgage payments. Though it can take some time to get, a preapproval letter sends a powerful message to the seller that you’re a serious buyer.

Second, act decisively. Do everything to keep the process moving. For example, tighten the timeline of your home inspector. Most inspectors can inspect a house within five days of your request. Never ask a motivated seller to wait weeks for a home inspection if you can get it done in days.

Lastly, be human with the seller. Send a handwritten letter, explaining why you and your family like the home. Selling a home can be emotional for homeowners, so you never know how far a personal letter can go.

4. Find an Affordable House in a Seller’s Market

Another challenge facing millennial homebuyers is the rising value of homes. For many of us—especially those that have just managed to pay off student loans and land a stable job—rising market prices could be the most frustrating hurdle we face.

Fortunately, the housing market is beginning to slow down. NAR predicts a 1 to 3% growth in housing prices this year, which is far less compared to the 5 to 7% annual growth over the last five years.⁽⁸⁾

My best advice, then, is patience. Once you start shopping, don’t give in to the temptation to stretch your dollars and buy a home that’s out of your price range. Keep your monthly housing payment (which includes mortgage, taxes, insurance, HOA dues, etc.) to no more than 25 to 30% of your take-home pay on a 15-year, fixed-rate conventional mortgage. No home is worth sacrificing your retirement or your kid’s college fund.

5. Gain Experience With the Buying Process

One of the best things you can do as a first-time homebuyer is familiarizing yourself with the buying process.

That’s why it’s extra important for millennial homebuyers to work with experts who know what they’re doing. Look for an agent who brings at least four years of experience to the table, one who knows the market well enough to find a great deal on the home that’s right for the buyer.

Partner with a real estate pro who has the heart of a teacher and takes time to listen to your needs and answer your questions. A good agent is more concerned about your bank account, not theirs.

We have prepared a comprehensive free, no-obligation, no agent hassle e-book:
“Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just click here

The main reason young people are working towards homeownership? 93 percent cited the desire to control their living space.  Renters don’t have that freedom.