How Attainable Is Homeownership for First-Time Buyers?

Buying a home in the current market is challenging, but especially for first-time buyers as they typically have lower incomes and less established credit than repeat buyers. According to personal finance company NerdWallet’s First-Time Homebuyer Affordability Report for Q2 2024, the housing payments on a typically priced home would consume nearly half of the median gross monthly income for first-time buyers. 

Although making a larger down payment or opting for a less desirable home may ease the process, these options aren't always feasible for everyone. The average home price in Q2 2024 was $439,000, but affordability involves more than just the listing price. NerdWallet's analysis—which factors in down payments, mortgage rates, real estate taxes, homeowners insurance, and private mortgage insurance—estimates that the monthly housing payment for the average priced home would be nearly $3,500 for first-time buyers.

One lesson that became apparent to home buyers over the past few years: You can’t take low mortgage rates for granted. After several years of rates below 5% (with periods even below 3%), current rates are a reminder that it’s not only home prices that matter in home affordability calculations. Borrowers can take some steps to ensure they qualify for the lowest rates available, but lenders will only go so low. Home down payments are another input that can have a considerable impact on how much buyers spend each month.

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