Buying a first home has long been treated as the standard milestone of adult financial life, yet a new industry report says fewer people are reaching it than in any year on record. Those who do get through look different from earlier buyers, with more family help, more debt and more compromise.
In this article we will explore the latest figures from the National Association of Realtors, what they show about income and down payments, and how a would-be buyer can decide on a sensible next step.
The Record Low in Plain Numbers
The National Association of Realtors (NAR) published its 2026 Home Buyers and Sellers Generational Trends Report this spring, and BAM reported on it in mid-April. The headline finding is that first-time buyers made up 21 percent of home purchases last year, which NAR describes as the lowest share ever recorded. The year before, the share was 24 percent. A three-point drop may look small on a chart, but in a market with millions of transactions it represents a large number of households that would once have crossed the threshold and did not.
It helps to be clear about what the number measures. The survey describes people who completed a purchase. Someone who spent two years saving, lost a bidding contest, and went back to renting does not appear in the statistics as a failed buyer; they simply do not appear. So a 21 percent share tells us that among the people who closed on a house, about one in five was buying for the first time. It does not directly tell us how many people wanted to buy and could not, although the direction of travel is a strong hint.
The figures here are American, and so are the rules, the lenders and the mortgage products behind them. Readers elsewhere will recognize the pattern, since many countries report that younger adults are buying later, but the details differ. Canada, the United Kingdom, Australia and much of Europe have their own deposit rules, tax treatments and government schemes, and the national statistics are collected differently. Treat the American numbers as one well-documented case rather than a global rule.
Another detail from the report is worth holding onto: 30 percent of buyers said they compromised on price. That phrase is vague on purpose, since it could mean paying more than planned, stretching a monthly budget, or settling for a home that was cheaper but needed work. What it does say is that nearly a third of people who made it to the closing table felt they had to bend somewhere. For anyone still saving, that is a useful reminder that the buyers who succeed are not necessarily the ones who found a perfect fit.
There is also a point about timing. The report covers purchases made in 2025 and was published in 2026, so it describes a market that has already moved on in some respects. Prices, mortgage rates and the number of homes for sale change from month to month, and readers should check current local conditions rather than assume last year’s pattern holds. What tends to last longer are the structural pressures the report points to: rent that absorbs savings, consumer debt, and a down payment that takes years to assemble.
Income, Debt and the Savings Gap
Averages hide the shape of the problem, so it is worth looking at who the report says is buying and what they bring with them. The generational split is the most useful part of the NAR release, because it shows that the buyers still entering the market are not all in the same position.
Incomes by Generation
According to the report as relayed by BAM, the median income of Gen Z buyers is $76,000. Younger millennials, who are between 27 and 35 in the survey, come in at $115,000, and older millennials, aged 36 to 45, at $132,700. These are medians for people who bought, so they reflect a filtered group. A household earning well below those figures may be buying too, especially in cheaper regions, but the figures suggest that completing a purchase increasingly takes a professional-level income or two incomes pooled together.
The gap between the youngest group and the oldest is $56,700 a year, and most of it is the ordinary effect of age and career progress. People in their late thirties and early forties usually earn more than people in their early twenties. The sharper point is that younger millennials, a group already well into working life, have a median income that still sits below that of the older cohort, while facing prices set by the whole market.
Student Loans and Other Debt
The report says 39 percent of younger millennials carry student loans, and the median balance among them is $30,000. That is a monthly obligation that lenders count when they decide how much a borrower can afford, and it also competes with saving. Someone sending a few hundred dollars a month to a loan servicer is, in effect, saving less toward a down payment even if they are disciplined about everything else.
The report also names high rent, credit card debt and student loans as reasons that saving takes longer. None of those is a surprise, but the combination matters. Rent is what many younger buyers pay while they save, so a rise in rent slows the very process that is supposed to end it. Credit card balances work in a similar way, because carrying them at high interest costs more than most savings accounts earn. Paying off expensive card debt is often a better use of money than adding to a deposit fund, though the right order depends on the numbers.
Saving Versus Finding
NAR asked buyers which step was hardest. For 30 percent of younger millennials it was saving for a down payment. Across all buyers, 56 percent said finding the right property was the hardest step. Those two answers tell different stories.
The first is about money before the search begins, and the second is about the market once the money is in place. A buyer can be in either position, or both in sequence, and the advice is different for each.
Younger Buyers Who Made It Through
A report built around generations invites a few cautious portraits. They are composites, drawn from the medians in the report, and no individual buyer will match them exactly.
One caution before reading them: a median is the middle buyer, so half of each group earned less or paid less than the figure shown. A Gen Z buyer who put down 9 percent is typical in the sense that many others put down more and many put down less. Use these portraits to calibrate expectations, not to set a target that you must hit.
Gen Z
The typical Gen Z buyer in the report earns $76,000 and put down a median of 9 percent. The median home size for the group was 1,600 square feet. Those are the numbers of a buyer who has moved quickly from starting a career to owning, which usually means help, a partner’s income, a lower-cost region, or some combination. It also means a thinner financial cushion than an older buyer might have, so repairs and rate changes bite harder.
Younger Millennials
Younger millennials show a median down payment of 13 percent and a median home size of 1,700 square feet. Their savings did most of the work: 67 percent relied on their own savings. Another 24 percent said they relied on gifts or loans from family or friends, and the survey allows more than one source, so the two groups overlap. This is the group carrying the student loan figures above, and the report suggests they are managing it through longer saving periods and a willingness to buy modest homes.
Older Millennials
Older millennials, with the $132,700 median income, are the strongest financial group in the report. Many of them have had more years to build equity from an earlier purchase, which is relevant because the report covers all buyers rather than first-time buyers only. A person in this group may be selling one home to buy another, which is a different situation entirely from entering the market for the first time. When commentary treats all of these buyers as a single “millennial” story, the picture gets blurred.
Family Money and Other Routes to a Down Payment
The report gives a clear indication of how younger buyers fund their purchases, and it is a mix of personal discipline and help from other people. It also shows that most buyers use a mortgage: 74 percent of all buyers financed their purchase. The question for a first-time buyer is rarely whether to borrow, but how much cash to bring to the table.
Savings First
The most common source for younger millennials was their own savings, at 67 percent. That figure is encouraging in one sense, because it means the typical buyer is not wholly dependent on a windfall. It is discouraging in another, because building that savings takes years when rent and debt payments eat into monthly cash flow. A practical approach is to automate a transfer into a separate account on payday, so the money never passes through the spending account, and to treat that account as untouchable except for the purchase.
Gifts and Loans From Family
About a quarter of younger millennials, 24 percent, leaned on gifts or loans from family or friends. This is a growing feature of housing markets in many countries, and it creates its own inequality: buyers with relatives who can help get in sooner than equally capable buyers without them. If you are offered family money, ask the lender early how they treat it.
Lenders in the United States commonly want a letter confirming that a gift is a gift and not a loan, and they may want a paper trail showing where the money came from. Rules differ by lender, loan type and country, so check before the funds move. A related tip is to keep any gifted funds in the receiving account for a while before the application, since sudden deposits of unclear origin are what underwriters tend to question.
Down Payment Options in General Terms
A 20 percent down payment is a familiar benchmark, but the report shows that median buyers put down far less: 9 percent for Gen Z and 13 percent for younger millennials. Lower down payments are possible through several kinds of loans, including government-backed programs in the United States and some state or local assistance schemes. They usually come with trade-offs such as mortgage insurance, income limits or counseling requirements.
A smaller deposit gets you in sooner, but it increases the monthly payment and the interest you pay over time. A housing counselor approved by a government agency or a mortgage professional can lay out the choices for a specific situation, and the information here is general, not personal advice. It is also worth asking about the cost of waiting: if a program offers help now but the rules are likely to change, a counselor can say whether acting sooner makes sense.
Closing costs deserve a separate mention, because they sit outside the down payment and can surprise first-time buyers. They cover things like lender fees, title work, appraisals and prepaid taxes or insurance, and the total varies widely by location and loan. Ask each lender for a written estimate early, so the figure is in your plan before an offer is made, not after.
Smaller Footprints and Compromises
The report says 89 percent of younger buyers bought previously owned homes. That is a notable number because it suggests that new construction, which tends to cost more per square foot in many markets, is out of reach for most of this group. Existing homes also bring the usual risks: older roofs, boilers, plumbing and electrical systems that may need replacing sooner than a buyer expects.
Buyers who accept older homes are making a trade. They save on the purchase price or the size of the mortgage, and in exchange they take on maintenance risk. A home inspection is the standard tool for measuring that risk, and for a first-time buyer it is worth paying for even when the market is fast and sellers are pushing waivers. A seller who refuses inspections is telling you something about how much they expect you to find.
The sizes in the report, 1,600 square feet for Gen Z and 1,700 for younger millennials, are not tiny by international standards, and many readers in dense cities or other countries would consider them generous. Still, they reflect compromise in one respect: they are smaller than many families would choose if price were not a concern. Combined with the 30 percent who said they compromised on price, they describe a market where buyers adjust their expectations rather than the other way around.
Compromise also has a cost over time that is easy to underestimate. A buyer who stretches the budget to win a bid may find that the first years of ownership leave no slack for a new water heater or a leak in the roof. A buyer who picks a cheaper home farther from work may save on the mortgage and then spend the difference on fuel, transit and hours in the car. Counting those side costs before making an offer turns a vague feeling of compromise into a number that can be compared.
A smart way to think about compromise is to separate what can be changed later from what cannot. Paint, flooring, kitchens and even some layouts can be improved over time. Location, lot, school catchment, commute and the structure itself cannot be changed. Buyers who are tight on budget are generally better served by compromising on finish and condition than on the fixed attributes, as long as the structural basics are sound and the repair budget has been priced honestly.
Renting Versus Buying as a Decision Framework
A record-low share of first-time buyers does not mean that everyone should be trying to buy. For some households, renting for longer is the better financial and personal choice. The decision turns on a handful of factors, and it is better to weigh them with real numbers than to follow a social norm.
The table below sets out the main questions in general terms. It does not replace advice from a licensed professional, and the weights differ for every person.
| Question | Points toward buying | Points toward renting |
| How long will you stay? | Likely five years or more in the same area | Job, family or location may change soon |
| Emergency savings after the purchase | Several months of expenses still in the bank | Down payment would empty your reserves |
| Monthly cost compared with rent | Total housing cost is close to or below rent | Ownership costs far exceed your current rent |
| Other debts | High-interest debt is paid down | Credit cards or loans are still growing |
| Repairs and upkeep | You can fund surprises from savings | Any large repair would force borrowing |
| Flexibility | You value stability and control of the home | You value the ability to move without selling |
Many first-time buyers also underestimate how much of the rent-or-buy question is about risk rather than arithmetic. A renter’s worst case is usually a rent increase or a move. An owner’s worst case includes a major repair, a drop in local prices at the moment they must sell, or a period of reduced income while the mortgage payment stays fixed. None of this argues against buying, since many owners build wealth over decades. It argues for entering with a cushion.
Ownership costs go beyond the mortgage payment. Property taxes, insurance, maintenance and sometimes homeowners association fees all count, and closing costs at the start are a real expense that the down payment does not cover. Renters, in contrast, pay their rent and often little else, but they have no equity and are exposed to rent increases.
As an illustration only, with invented round numbers: suppose a household pays $2,000 a month in rent and is offered a home where the total monthly cost of owning would be $2,600. The extra $600 is not simply a loss, because part of the mortgage payment builds equity. But it is also not free, because the household takes on repairs, taxes and the risk that the home loses value. Whether that trade is worth it depends on how long they stay and how stable their income is. The calculation should be run with local figures and, ideally, reviewed by someone who can see the whole picture.
Final Thoughts: A Sensible Order of Choices
For readers who want to move toward a first purchase, the order of decisions matters more than any single trick. The following sequence reflects how the process usually works in the United States, with notes where it varies elsewhere.
Set the Budget and Check Credit
Start with the budget you can live with, not the budget a lender will approve. A lender will often approve more than a household can comfortably pay, especially if other costs are left out. Write down your monthly income, fixed bills and savings goals, and work backward to a housing payment that leaves room for ordinary life and emergencies.
Next, look at your credit. Pull your credit reports from the official source in your country, correct errors, and avoid opening new accounts or running up balances in the months before applying. Lenders use these records to set the interest rate, and a small difference in rate adds up over decades. If you carry credit card debt, work out whether paying it down beats adding to savings.
Build the Down Payment and the Reserve
Then build the down payment and a separate reserve for closing costs and repairs. Closing costs exist whatever the price of the home, and some buyers forget them until late in the process. Treat the reserve as part of the purchase price. If family is offering help, settle the terms in writing, and ask the lender how they will document it.
Compare Lenders and Search
After that, get pre-approved by at least two lenders and compare the offers. Pre-approval tells you what a lender is prepared to offer and shows sellers you are serious. Comparing offers shows how much rates and fees vary. Ask about programs for first-time buyers, since some require early application or counseling before you sign a contract.
Finally, search for the home with a ranked list of must-haves, and be honest about which items can change later. Hire an inspector, read the disclosures, and keep your reserve intact. If the numbers only work with perfect conditions, wait. Time spent saving is not wasted when the market is demanding, and a stronger financial position often matters more than catching a particular listing.
It also helps to keep the people around you informed. If you are buying with a partner, agree in advance on who contributes what, how the home would be owned, and what happens if circumstances change. If family is helping, agree on whether the money is a gift or a loan and what it would mean for the relationship if repayment became difficult. Those conversations are easier before a contract exists than after. A real estate agent, a mortgage lender, a housing counselor and, where relevant, a lawyer each see a different part of the process, and using them in the right order is cheaper than fixing a mistake later.
Read more about Newstwick
Frequently Asked Questions
1. How many first-time buyers are there in the housing market now?
According to the National Association of Realtors report covered by BAM in April, first-time buyers made up 21 percent of home purchases last year. That is the lowest share the group has recorded, down from 24 percent the year before. The figure counts buyers who completed a purchase, not everyone who wanted to buy.
2. What is the typical down payment for a first-time buyer?
The report gives medians by generation: 9 percent for Gen Z and 13 percent for younger millennials. These are medians for people who bought, so your own needs may be higher or lower depending on the loan type. A lender or a housing counselor can explain which programs fit your situation.
3. Do I need 20 percent down to buy a house?
No. The report shows that typical younger buyers put down far less than 20 percent, and 74 percent of all buyers financed their purchase. A smaller deposit usually means a larger loan and, in many cases, mortgage insurance, so compare the total monthly cost.
4. Can family help with a down payment?
Yes, and many buyers rely on it. Among younger millennials, 24 percent said they used gifts or loans from family or friends. Lenders usually ask for documentation, so talk to yours before any money is moved.
5. Is it better to rent or buy my first home?
It depends on how long you plan to stay, your savings after the purchase, and the full monthly cost of owning compared with renting. Buying tends to suit people with stable plans and a repair cushion. Renting can be the stronger choice when your plans are uncertain.
6. What is the hardest part of buying a first home?
The report found that 56 percent of buyers said finding the right property was the hardest step. For younger millennials, 30 percent named saving for a down payment as the hardest. Which one you face depends on where you are in the process.