Banks are eager to lend a hand to first-time homebuyers, but that doesn't mean you should borrow as much as they'll loan you. Why? It's all about the cash flow.
Older millennials in their early 30s are looking to buy homes. The median age of a first-time buyer is about 33, up from 29 in the 1970s, according to Zillow, a real estate marketplace site.
Lenders have recently introduced programs that will make it easier for creditworthy borrowers to buy a home with very little down even as they juggle other demands, like student loan repayment or starting a family.
Banks have partnered with Fannie Mae and Freddie Mac, two entities that provide financing to lenders, to make mortgages available to first-time buyers with a down payment that's as low as 3 percent. For instance, Wells Fargo launched "yourFirstMortgage" in late May. Similar programs are available at SunTrust and Bank of America. Quicken Loans offers a mortgage with a down payment option of just 1 percent.
The demand is there, banking industry representatives say. Fifteen percent of single-family home loans made in 2015 were to first-time buyers, according to the American Bankers Association. That figure has risen most years since 2009, when 9 percent of loans were made to new home purchasers.
At the same time, the median listing price for a home in the U.S. is $239,900, up 4.8 percent year over year, according to Zillow.