First-time home buyers are facing some of the toughest conditions in decades. High home prices, limited inventory, and soaring mortgage rates have made breaking into the housing market harder than it’s been in over 40 years. If you’re planning to buy your first home, understanding the current real estate landscape and mortgage process can go a long way in helping you move forward with confidence.
As of 2024, only about 1 in 4 home buyers is a first-timer — the lowest share since the National Association of Realtors began tracking the data in 1981. At the same time, the average age of a first-time home buyer has climbed to 38, up from 35 in 2023 and from the late 20s back in the 1980s. The typical first-time buyer now has a household income of $97,000, a jump of $26,000 in just two years.
“First-time home buyers are struggling to break into the housing market as high prices and mortgage rates push homeownership further out of reach,” said Zhou Yu, a housing expert and associate professor of family and consumer studies at the University of Utah.
The data presented in this article comes from recent National Association of Realtors (NAR) research on home buyers and sellers, generational trends, and racial equity in housing.
Next, we’ll dig into what today’s first-time home buyer really looks like — and how the path to homeownership has changed.
- The median age of first-time buyers rose to 38, up from 35 in 2023 and from the late 20s in the 1980s.
- The typical first-time buyer has a household income of $97,000, reflecting a $26,000 increase over two years.
- In 2024, first-time buyers made up just 24% of all home buyers, the lowest share since tracking began in 1981.
- The median down payment for first-time buyers is 9%, the highest since 1997.
- Ninety-one percent of first-time buyers financed their home, and 25% used a gift or loan from family or friends to help fund the down payment.
First-Time Home Buyer Profile: Age, Income, and Demographic Trends
If you’re buying your first home this year, you’re not alone — but you might be older and spending more than buyers a generation ago.
The median age of a first-time home buyer rose to 38 in 2024, up from 35 in 2023. Back in the 1980s, first-timers were often still in their late 20s. Today, many buyers are waiting longer as home prices, mortgage rates, and living costs climb higher.
Most first-time buyers today are married, have a median household income of $97,000, and purchase previously owned homes. Almost all finance their purchase, making a median down payment of 9% — the highest since 1997. Saving for that down payment, along with understanding the buying process, topped the list of challenges first-time buyers face.
“First-time home buyers are primarily millennials, aged 25 to 40,” Yu said. “These buyers are more common in suburban or emerging suburban areas, as well as smaller cities and regional markets where home prices are more affordable.”
The percentage of first-time home buyers who are married couples dropped to 50% in 2024 — slightly down from 52% in 2023. Home prices today often demand two incomes to make ownership possible. That could be one reason first-time buyers are still predominantly married couples.
Demographic shifts also shape who buys their first home. While the overall percentage of first-time home buyers has shrunk, more buyers of color are stepping into homeownership. Of first-time home buyers in 2024, 49% are Black/African American and 43% are Asian/Pacific Islander, compared to just 20% who are white.
Black buyers are making gains despite facing higher mortgage denial rates and longer savings timelines, while Asian buyers maintain strong first-time ownership rates, often with help from multigenerational household incomes.
The share of first-time homeowners who are Hispanic/Latino buyers rose to 41% in 2024, up sharply from 32% in 2023. Rising home prices, limited inventory, and wage gaps continue to challenge first-time buyers across all groups, but demographic shifts are reshaping the path to homeownership — even as the barriers grow steeper.
What Share of Home Buyers Are First-Time Buyers?
In 2024, first-time buyers made up just 24% of all home buyers — the lowest share recorded since tracking began in 1981. It’s a sharp drop from 32% in 2023 and even lower than the previous record low in 2022, when first-time buyers made up only 26% of the market.
This continues a steady downward trend over the past few years. According to the NAR, fewer first-timers are entering the market, squeezed out by higher prices, tighter inventory, and rising mortgage rates.
“There has been a continued drop in the percentage of home purchases that are going to first-time buyers, and first-time buyers have continued to get older,” said Christopher Timmins, professor of economics at the University of Wisconsin–Madison.
Along with the shrinking share, statistics show that the average age of first-time home buyers keeps climbing. Higher income requirements aren’t helping, either. The typical first-time buyer in 2024 had a household income of $97,000, up from $95,900 in 2023 — and way up from $71,000 in 2022.
The Growing Challenges Facing First-Time Home Buyers
Buying your first home isn’t getting any easier. The barriers to entry keep piling up. Home sale prices are still climbing, and mortgage rates have doubled compared to just a few years ago. In 2021, the average 30-year fixed mortgage rate sat at 2.96%. By 2023, it had jumped to 6.81%, according to data from Freddie Mac, retrieved from FRED, Federal Reserve Bank of St. Louis. This represents a 130% increase in just two years.
Meanwhile, income growth hasn’t kept up. The typical monthly payment for a median-priced home, after taxes and insurance, is now $3,096. To afford that, buyers need to make around $119,800 a year. Only about 1 in 7 renters meet that threshold, putting a first home out of reach for many.
“First-time home buyers have faced a combination of high housing prices and high interest rates, which have restricted the ability of many to become homeowners for the first time,” said Jonathan Ernest, assistant professor of economics at Case Western Reserve University. “In addition, rents have remained stubbornly high in many areas, which has made saving up for a downpayment more difficult.”
Mortgage rates and downpayment requirements aren’t the only hurdle. First-time buyers are also competing with repeat buyers who have the advantage of cash offers and equity from selling their previous homes. As Kyle Kopplin, assistant professor of economics at Black Hills State University, said, “A seller may be tempted to take a cash offer rather than a contingent offer based on financing.”
It doesn’t help that starter homes are getting harder to find. Builders have little incentive to create affordable, entry-level housing. “There is often a shortage of available homes, particularly starter homes targeted to new buyers,” Timmins said.
In 2024, about 85% of first-time buyers ended up purchasing previously owned homes, often competing in a tough market where move-in-ready homes get multiple offers quickly.
Down payments are also putting more pressure on buyers. The median down payment for first-time buyers hit 9% in 2024, the highest it’s been since 1997. While it’s still far lower than the 23% median down payment for repeat buyers, it’s a noticeable increase from 8% in 2023. Many buyers feel pushed to offer bigger down payments to stand out against cash buyers.
Higher mortgage rates haven’t just made monthly payments larger — they’ve also shrunk how much buyers can borrow. “Higher mortgage rates have increased the cost of loans, but they have also reduced the amount that can be borrowed. This has severely constrained potential buyers, especially first-time buyers,” said Simon Stevenson, real estate and economic development director at Old Dominion University.
Financing remains the go-to for most new homeowners. In 2024, 91% of first-time buyers financed their home purchase. Over half (52%) used a conventional loan, while 29% relied on FHA loans and 9% used VA loans. The number of first-time buyers using an FHA loan has steadily declined from 55% in 2009 to today’s 29%. Meanwhile, 25% of first-time buyers got help from family or friends through gifts or personal loans to fund their down payments.
For many young people, these financial pressures have delayed the dream of homeownership. “Many young people are delaying their first home purchase, often forced to rent longer or live with family as financial pressures mount,” Yu said.
Understanding first-time home buyer hurdles — and your options, such as home warranties or learning the difference between home insurance and warranties — can make the path forward a little clearer.
Who Qualifies as a First-Time Home Buyer?
A first-time home buyer isn’t just someone who’s never owned a home before. In most cases, you’re considered a first-time buyer if you haven’t owned a primary residence in the last three years. Even if you once owned a home but sold it years ago, you may still qualify.
Here’s a quick breakdown of who fits the bill:
- You’ve never owned a principal residence (or typically, you haven’t within the last three years).
- You’ve owned a property, but it wasn’t your main home — for example, an investment property.
- If you’re married, both spouses must meet the first-time buyer criteria.
That said, the exact definition can change depending on the mortgage program you’re applying for. Some programs stick to the three-year rule, while others have additional requirements based on income or location.
Here’s how it works for different types of loans and assistance programs:
- Federal Housing Administration (FHA) loans: FHA loans use the three-year rule. If you haven’t owned a primary residence in the past three years, you’re considered a first-time buyer. FHA loans are popular because they only require a 3.5% down payment if you meet credit score guidelines.
- Conventional loans: Many conventional loans offer first-time buyer perks, such as lower private mortgage insurance (PMI) rates or smaller down payments — sometimes as low as 3%. You’ll need to meet the lender’s credit and income standards to qualify.
- State and local assistance programs: Most state and local first-time buyer programs follow the same three-year rule. However, they often add extra requirements, such as income caps or limits based on the home’s location.
No matter which loan or program you’re looking at, it’s a good idea to double-check the specific rules before applying. A small detail could make a big difference in the help you can get.
What To Know Before Buying Your First Home
Buying your first home is a huge milestone, but it also comes with a lot of expenses and decisions beyond your monthly mortgage payment. Here are a few key tips to help you navigate the process and avoid common first-time buyer pitfalls.
Explore First-Time Home Buyer Programs
Many first-time buyers can qualify for special loans and assistance programs that offer lower down payments and reduced closing costs. FHA loans, for example, only require a 3.5% down payment if you meet the credit score requirements. Conventional lenders may also offer first-time buyer perks. You can also look into state and local programs, which often add income- or location-based incentives. (Check out HUD’s resources on first-time buyer programs.)
Think Beyond Your Mortgage Payment
It’s easy to focus only on what you’ll owe each month, but homeownership brings a lot of other expenses. You’ll need to budget for maintenance costs, such as a new roof, HVAC replacement, and gutter maintenance. Many first-time buyers underestimate the upfront costs for furniture, appliances, and basic home essentials — all of which can add up fast, Stevenson said.
Plan for the Long Haul
When choosing a loan, don’t just look at the short-term payments. “Buyers need to consider the overall cost of a loan, over its lifetime,” Stevenson added. Adjustable-rate mortgages (ARMs), for instance, can seem affordable at first but may spike later, as many homeowners learned during the 2007–2009 financial crisis.
Build an Emergency Fund
Life as a homeowner comes with surprises — from burst pipes to roof repairs. “Before entering into a purchase, it’s important to consider the many unexpected costs that arise,” Timmins said. Building a reserve of savings can help you weather these without falling into debt.
Be Realistic About Your Budget
It’s tempting to buy the biggest house you can afford on paper. But Kopplin advises keeping your search below your maximum preapproval limit. “Be realistic about anticipating higher costs,” he said, and leave yourself breathing room for future repairs, upgrades, and emergencies.
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FAQs About First-Time Home Buyers
Why are fewer people buying homes for the first time in 2024?
Fewer people are buying homes for the first time due to a combination of high costs, limited supply, and stricter financial requirements. The median home price has continued to climb, and mortgage rates have more than doubled compared to just a few years ago. As a result, monthly mortgage payments are now unaffordable for many renters — only about 1 in 7 renters currently earns enough to qualify for a median-priced home.
At the same time, first-time buyers face stiff competition from repeat buyers who can make larger down payments or all-cash offers. Builders have also pulled back on creating affordable, entry-level homes, leading to a shortage of inventory in that price range. With fewer affordable homes and higher barriers to entry, many would-be buyers are forced to delay homeownership or rent longer than planned.
How can single first-time buyers compete in today’s market?
Single buyers face unique challenges in today’s market, especially with rising home prices and a growing need for dual incomes. However, here are some ways to stand out:
- Get preapproved early: A mortgage preapproval helps signal to sellers that you’re serious and ready to act quickly.
- Explore first-time buyer programs: Many state and local programs offer down payment assistance or discounted mortgage rates specifically for first-time and single buyers.
- Be flexible with location: Consider less competitive areas or emerging suburbs where prices are lower and inventory is more accessible.
- Strengthen your financial profile: A higher credit score or larger down payment can make your offer stand out.
- Work with a knowledgeable agent: An experienced real estate agent can help you find overlooked listings and negotiate effectively, even against cash buyers.
What regions or cities are more affordable for first-time home buyers?
Many first-time buyers are looking beyond major metros to find affordable housing options in smaller cities, suburban areas, and regional markets where prices haven’t risen as dramatically.
Some areas that tend to offer more affordable entry points include:
- Midwestern cities such as Cleveland, Pittsburgh, and St. Louis, where median home prices remain below the national average.
- Southern metros such as San Antonio, Birmingham, and Louisville, which combine lower costs with growing job markets.
- Emerging suburbs around larger cities — like those outside of Atlanta, Dallas, or Minneapolis — where new developments are more competitively priced.
These regions often provide a better balance of price, amenities, and availability, especially for buyers who can be flexible on location or work remotely. Just keep in mind that affordability varies widely within states, so it’s worth researching individual neighborhoods — not just cities — when evaluating where to buy.
