Recently LendingTree conducted a study and found was that millennials (defined as anyone born between 1981 and 1996) make up a majority of potential homebuyers in most of the country’s largest cities in America.
Millennials make up the largest group of homebuyers in the United States, surpassing members of older (and richer) generations like Generation X and baby boomers. And though the COVID-19 pandemic has doubtlessly caused some millennials to put their homebuying plans on hold, many members of this generation are still looking to take advantage of near record-low mortgage rates to buy a house.
But where are millennials looking to buy? To answer this question, LendingTree analyzed mortgage purchase requests made on the LendingTree platform across the nation’s 50 largest metros from Jan. 1 through Dec. 15, 2020.
- Share of mortgage requests coming from millennials: 59.09%
- Average millennial age: 31.48
- Average credit score among millennials: 705
- Average down payment amount among millennials: $78,062
- Average requested loan amount among millennials: $416,267
Tips for millennial Boston condo buyers
Some millennials have accumulated less wealth than older generations, and they haven’t had as much time to build a strong credit history. To overcome these obstacles, it’s important to get your financial house in order.
Here are some tips to prep your finances for homeownership:
Work on your credit score. A solid credit history and higher credit score show lenders you know how to manage debt. Work on improving your credit score by making on-time payments and keeping your spending in check.
Pay down your monthly debts. Another factor lenders look at is your debt-to-income (DTI) ratio, the percentage of your gross monthly income that goes toward recurring debts. Maximum DTI ratios vary by loan program, however, so it’s a good idea to keep your total DTI ratio (which includes your monthly mortgage and all debt payments) at 36% or less.
Boost your savings. Whether you plan to buy a home next year or several years from now, you’ll need enough cash for a down payment and closing costs. Create a separate savings account for your homebuying expenses, and make regular deposits each month so you’ll have a cushion when it’s time to make your home purchase.
Know your loan options. It can be a challenge to build credit quickly or come up with a significant down payment. But don’t stress — there are specific first-time homebuyer programs designed to make homeownership more affordable. For example, borrowers with a credit score as low as 580 and a down payment of only 3.5% may qualify for a Federal Housing Administration (FHA) loan. Plus, many local and state agencies offer down payment assistance programs to help bridge the gap between your savings and down payment expenses.