6 First-Time Homebuyer Tips for Gen Z, According to Real Estate Experts

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As Gen Z ages into adulthood, this generation — born between 1997 and 2012 — is facing unique challenges when it comes to their financial future. But the future isn’t all doom and gloom.

Only 26.3% of adult Gen Zers are homeowners — versus 54.8% and 72% of millennials and Gen Xers, respectively — but a closer look at Redfin’s report of homeownership reveals that more Gen Z adults own homes thanmillennial and Gen X adults when they were that age.  

It’s widely assumed that Gen Z can’t afford to buy homes, and a 2024 Bank of America report found that 54% of the Gen Z adults surveyed said they need financial assistance, typically from their parents, for things like groceries, rent, a phone plan and health insurance. 

But while making ends meet can be a challenge, NeilsonIQ reports that Gen Z will be the wealthiest generation ever, and currently, the average 25-year-old American Gen Zer is earning a $40,000 annual income. Accounting for taxes, government transfers and inflation, this places Gen Z as wealthier than millennials and baby boomers were at their age.

As more Gen Zers want to purchase homes, they will benefit from understanding the process, knowing their finances and considering their lifestyle factors, as well as thinking about the future as they move through the homebuying process. GOBankingRates talked to real estate experts to gather their first-time homebuying tips for Gen Z.

Learn the Process and Options

“One of the mistakes I see from Gen Z homebuyers is that they are not doing the proper research on the homebuying process,” said Sean Adu-Gyamfi, a licensed associate real estate broker with Coldwell Banker Warburg. He sees the social media “real estate gurus” who preach homeownership and make it look easy, but in reality, he said, “they rarely speak about the long-term effects and costs.”

In order for Gen Z homebuyers to fully understand the process, Adu-Gyamfi urged them to speak to professionals, including licensed real estate agents, attorneys, lenders and contractors, to get as familiar with the process as possible.

Know Your Finances and Mortgage Options

To decide whether or not you’re ready to begin the homebuying process, it’s important to get a handle on your finances and know how much you have saved, how much you can allocate to a down payment, and how much you can afford for your monthly mortgage and insurance payments. John Gluch, owner of Gluch Group, always suggests “sitting down with a financial advisor or using some smart online tools to map out your finances in detail” as you begin to think about buying a home.

Conventional wisdom says that you should have a 20% down payment before you’re ready to buy a house. This will lower the principal that you owe, thereby lowering your monthly mortgage payments and allowing you to avoid paying mortgage insurance. However, Dan Hnatkovskyy, housing expert and co-founder and CEO of NewHomesMate, pointed out that while “you’ll still want some cushion for closing costs and home repairs,” you shouldn’t let that figure hold you back.

Other mortgage options, like Federal Housing Administration (FHA) and Veteran Affairs (VA) loans, typically require a smaller down payment. “I can’t stress enough how important it is to closely understand these options and get preapproval,” Gluch said. He also recommended shopping around for the best rates because “even a slight difference can mean saving a bundle in the long run.” 

Budget For More Than Your Mortgage

It can be easy to look at the monthly mortgage payment and think that’s all you’ll be paying each month. But the reality is much different. “Gen Z should budget for closing costs, maintenance, property taxes and insurance,” said Karen Kostiw, a licensed real estate salesperson with Coldwell Banker Warburg.

Because making large purchases on credit while you’re qualifying for a mortgage can impact your ability to get approved, Gen Z buyers need to be prepared for these costs. Prospective buyers “should budget for after-closing purchases, such as a car, furniture, home improvements, lawn maintenance, etc., and have a two-year or more rainy day fund for unexpected capital improvements that will occur,” Kostiw said.

Consider Lifestyle Factors

Kostiw recommended Gen Z consider their lifestyle needs when buying for the long term. That way, they can “ensure they’re purchasing in a location that matches their happiness quotient,” she said.

Certain factors — such as proximity to work and social activities as well as the availability of amenities like parks, grocery stores and gyms — should be taken into account in the final homebuying decision.

First-time Gen Z buyers should also account for how their lives could change in the upcoming years. “Their needs may evolve, whether it’s due to career changes, family planning, or shifts in lifestyle, so opting for a property with extra space for flexibility can be beneficial in the long run,” she said.

Think About Selling

“It seems silly to talk about selling when a buyer is just getting ready to buy, but researching and anticipating future resale value is crucial before making a major financial investment in a home,” said Gerard Splendore, a licensed associate real estate broker with Coldwell Banker Warburg. Young Gen Zers may not be thinking that long term, but it’s a crucial step.

When you’re looking for a home, the first step is to make sure it meets your current needs, but then it’s time to think about how the home could appreciate and what you could potentially sell it for down the road.

But Splendore was quick to point out that while “the future is uncertain, and there are no guarantees,” understanding “how the home’s value will hold and, ideally, increase is part of the equation.”

Think Outside the Box

Hnatkovskyy sees the myth floating around social media that “only the wealthy can afford homes right now.” But he says that isn’t the case. “Yes, prices are high, but there are plenty of options out there that don’t involve millionaire status,” he said.

He recommended looking in up-and-coming neighborhoods, rather than trying to jump right into high-priced areas, or considering a fixer-upper that you can make your own.

Another surprising option is to purchase a home with a nonromantic partner. In a survey by Risk Strategies, nearly 15% of Americans have already co-purchased a home with someone they aren’t romantically involved with. Seventy percent of Gen Zers surveyed said they would be open to this idea. This idea offers cost advantages, as the expenses will be split, but you should be sure that all parties understand their responsibilities. 

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