Home Buying Tips for Gen Z: How to Achieve Your Dream of Owning a Home

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For Generation Z, the demographic group following Millennials, the dream of homeownership is alive and well.

In an August 2019 survey by Freddie Mac, 86% of their Gen Z respondents want to have a home someday. They estimated that they’d own a home by the time they turn 30. The government-sponsored enterprise surveyed over 1,500 Americans, ages 14 to 23.

However, Gen Z sees several challenges to homeownership, like prices, saving up for a down payment, job changes, and student debt. They feel their parents educated them on finances, but they still lack knowledge of handling mortgage loans.

As early as now, home buying for Gen Z doesn’t have to be an overwhelming process. Here’s how you can prepare so you can own a house by the time you turn 30:

Consult with the experts

Even if you’ve learned about finances from your parents, it’s still best to talk to a professional. A financial adviser can work with you on how to maximize your savings. Talking to an adviser can be handy when you’re not confident with your financial choices, have credit card debt, or want to tweak your budget strategy.

If you’re not familiar with the mortgage process, talk to a specialist. They’ll walk you through what happens when buying a home. You’ll also learn about the credit score, down payment, and other requirements that you need to meet.

Build a strong emergency fund

Owning a home doesn’t mean expenses stop after buying it. You’re also responsible for your property’s maintenance and upkeep costs. Before buying your first home, have an emergency fund worth three to six months of expenses.

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Improve your credit score

Be smart about how you use your credit cards or loans. You can do so by:

  • Watching your debt-to-income (DTI ratio). Your DTI ratio measures how much of your income that goes into paying your debt. Having your ratio to at least 43% shows the mortgage lender that you can afford repayments and that you won’t default on your loans.
  • Keep your balance low. Keep up with your monthly bills.
  • Minimize student loans. Take out only the student loan you need and consider working through college to pay for daily expenses. That way, you can focus on paying off your student loans as soon as you graduate.

Check your credit report

Take advantage of getting your credit report once a year. When you receive it, notify the credit bureau of any errors you find. Any improvements in your report will improve your credit score.

The minimum credit score that will qualify you for most loans is around 580. If your score is lower, browse the report and see how you can improve your chances of buying a home you want.

Maximize the available technology

There’s a variety of phone apps that can help you with your financial goals. Some options include:

  • Budget trackers
  • Investing apps
  • Savings apps
  • Rent reporting tools

If you’re part of Generation Z, you likely want to own a home before you turn 30. With proper financial education and preparation, your dream is within reach.

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