Introduction
Fast facts about First-Time Home Buyers:
- Family and program assistance play a major role for younger buyers. Recent surveys show roughly 25%–40% of buyers under 35 used a gift or loan from family or friends to cover down payment or closing costs (Zillow 2024; NAR Generational 2024). Complementing family help, about four in ten FHA purchase loans included down payment assistance in the latest full fiscal year (HUD FHA FY 2023), and thousands of local/state/employer programs remain available (Down Payment Resource).
- The typical age people buy a first home is 35, and it remains elevated versus historical norms, reflecting affordability headwinds from high prices and rates. NAR’s 2024 Profile reports a median first-time buyer age of 35, consistent with other industry sources; the median peaked at 36 in 2022 and eased to 35 thereafter ((source); corroborating: NAR 2024 Profile, Zillow 2024, Freddie Mac).
- Among under‑35 buyers, reports converge that family help is common: Zillow’s 2024 survey shows about four in ten used gifts/loans for purchase costs, while NAR’s 2024 generational data puts the share closer to one‑quarter to one‑third. Both confirm assistance is much more prevalent among younger buyers ((source); see also Zillow 2024, NAR Generational 2024).
- Typical down payments vary by buyer type. In NAR’s 2024 Profile, the median down payment was 8% for first‑time buyers, 19% for repeat buyers, and 15% overall. At a $400,000 price, 8% is ~$32,000, illustrating why many first‑time buyers target $30,000+ in cash. Minimums can be lower depending on program: 0% for eligible VA and USDA; as low as 3% for some conventional options; and 3.5% for most FHA borrowers. NAR reported record-high median existing-home prices in mid‑2024, which keeps dollar down payments elevated (NAR 2024; (source); NAR prices).
- The U.S. personal saving rate remained low in late 2024—3.4% in September, per the Bureau of Economic Analysis—limiting how quickly typical households can accumulate down payments (BEA). In parallel, Federal Reserve household surveys show that about one‑fifth of recent buyers used gifts or loans from family/friends for purchase costs, underscoring the role of assistance when saving takes years ((source)).
Current Trends in Home Buying
Affordability pressures continue to push first-time purchases later into one’s 30s. The typical first-time buyer is 35 today, per NAR’s 2024 Profile, consistent with Zillow’s 2024 CHTR and Freddie Mac. Elevated mortgage rates—generally in the mid‑6% to high‑7% range for 30‑year fixed loans since mid‑2023—keep monthly payments high (Freddie Mac PMMS). Wage growth has cooled to the mid‑4% range on the Atlanta Fed’s tracker, offering only modest real gains against record price levels (Atlanta Fed). NAR’s affordability index remains near multidecade lows, reflecting the combined effect of price and rate levels on purchasing power (NAR HAI).
The National Association of Realtors’ 2024 Profile of Home Buyers and Sellers shows that the median age of first-time home buyers is 35, down from the 2022 peak of 36 and consistent with 2023. Student-loan payments restarted in October 2023, which tightened cash flow for many would-be buyers; delinquencies have risen off near‑zero levels from the pause period (New York Fed). Underwriting rules make the documented student-loan payment directly affect debt‑to‑income: conventional loans can use the reported IDR/SAVE payment (even $0 when applicable), FHA uses the documented amount or 0.5% of balance if not determinable, and VA uses actual payment or 5% of balance divided by 12 when necessary (Fannie Mae; FHA Handbook; VA Handbook; SAVE plan).
Impact of Financial Assistance
One clear divide among the under‑35 age bracket is financial assistance. Depending on methodology, approximately 25%–40% of under‑35 buyers report using gifts or loans from family/friends for down payment or closing costs (Zillow 2024; NAR Generational 2024). Programmatic down payment assistance is also material—about 40% of FHA purchase loans used DPA in FY 2023 (HUD FHA). Families can also leverage the IRS annual gift‑tax exclusion ($18,000 per recipient for tax year 2024) to help multiple members contribute without filing gift‑tax returns (IRS).
Challenges in Saving for a Down Payment
With median down payments at 8% for first‑time buyers and 15% overall, the cash needed often reaches the low‑to‑mid five figures—e.g., ~$32,000 on a $400,000 purchase—while minimums vary by program (0% VA and USDA; as low as 3% for some conventional loans; 3.5% for most FHA borrowers). The personal saving rate was 3.4% in September 2024, indicating many households need years to build typical down payments without assistance (BEA). This helps explain why about one‑fifth of recent buyers, across ages, report using family/friend funds for purchase costs (Fed SHED).
Conclusion
Financial and program assistance can meaningfully accelerate the path to ownership for first‑time buyers by clearing down‑payment and DTI hurdles. At today’s mortgage rates, monthly ownership costs for a typical home often exceed median rents in many metros—a gap documented by rate, price, and rent trackers—though the result is highly local and sensitive to down payment and the mortgage rate secured (PMMS; Redfin payments; Zillow ZORI; NAR EHS; Atlanta Fed HOAM). Even a 1‑percentage‑point change in rate can shift monthly principal‑and‑interest by about 10% and change borrowing power by roughly 10–11%, which is why rate movements and buydowns materially affect the rent‑vs‑buy calculus (PMMS).
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Sources: Bloomberg, CNBC, Business Insider, Federal Reserve.
Photo by Milan2099 / Gettyimages
