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Want to buy a house but can't afford it right now? A financial expert offers advice to Gen Zers and Millennials

Chief Financial Officer Liz Ewing weighs in with tips for those preparing to buy a future home.

Damircudic | E+ | Getty Images

The low-interest-rate environment we experienced in 2020 and 2021 made it an ideal time to enter the housing market and snag a reasonable mortgage despite the concurrent increase in house prices.

While those who were lucky enough to take advantage of this rare opportunity likely had savings on the sidelines to help them buy their new homes, others, including many Gen Zers and Millennials, weren't even close to being financially ready for homeownership.

A 2022 Bankrate survey cited affordability as the main roadblock for Gen Zers and Millennials when it comes to owning a home. Whether or not you're in a good place financially to purchase a house at the moment, Select takes a look at some things you can do in the meantime to prepare.

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Improve your credit score

Your credit score plays a huge role in the interest rate you'll receive when you apply for a mortgage. While some mortgage lenders such as Rocket Mortgage and CitiMortgage® offer options that cater to people with lower credit scores, it's more beneficial to improve yours before submitting an application. The higher your credit score is, the lower your interest rate will be, and this can end up saving you thousands of dollars over the life of your home loan.

Rocket Mortgage

  • Annual Percentage Rate (APR)

    Apply online for personalized rates

  • Types of loans

    Conventional loans, FHA loans, VA loans and Jumbo loans

  • Terms

    8 – 29 years, including 15-year and 30-year terms

  • Credit needed

    Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met

  • Minimum down payment

    3.5% if moving forward with an FHA loan

Terms apply.

"Checking your credit score early on and ideally prior to getting serious about purchasing a home will provide the opportunity to improve it, should you need to do so," explains Liz Ewing, chief financial officer at Marcus by Goldman Sachs.

Continuing to pay your bills on time and not making any late payments — or missing payments altogether — can also have an impact on your credit score, or even help to raise it.

Set a savings goal

"A recent report from Apartment List, a rental platform, found that two-thirds of aspiring millennial homebuyers have not been able to save enough money for a down payment on a home," Ewing says.

A down payment is a lump sum of money that gets paid upfront when you buy a home and is usually a portion of the home's total value — the home loan you're taking out covers the remainder of the home's value.

The down payment you'll need to make varies depending on the home's price and the type of loan you're applying for. For example, if you wanted to apply for a jumbo loan, you'd need to make a down payment that's 10% to 20% of the home's value. If you wanted to take on an FHA loan, though, you'd need to make a down payment of just 3.5%.

Figuring out which kind of loan you want can help you determine how much money you'll need to save up for the down payment. You'll also want to consider your current expenses in relation to what you can afford to pay for a mortgage.

Keep in mind that the lower your down payment is, the higher your monthly mortgage payments will be. If you already have high amounts of monthly expenses — say you provide financial assistance for a family member or have a massive student loan payment to take care of — it might be worth it to put more money toward your down payment so you'll have a slightly lower mortgage payment each month.

"When taking into account the down payment, your income, expenses and current debts, you can establish a savings goal and make an actionable plan to reach that amount," Ewing says.

Know where to save your money

High-yield savings accounts provide an easy way to save money while earning higher-than-average interest rates on your balance. In other words, these accounts can help your money grow without having to invest it. And the higher your balance is, the more interest you'll earn.

"When deciding where to save money, consider banks and banking platforms that offer competitive interest rates to help your money work as hard as possible," Ewing says. "It may be worth considering opening a high-yield savings account just for your down payment and setting up automatic direct deposits into the account on a monthly basis to save the money before having the chance to spend it."

Select ranked the Marcus by Goldman Sachs High Yield Online Savings as the best account with no fees. The SoFi Checking and Savings account is another great option, as it offers an attractive welcome bonus after you set up and receive direct deposit payments, allowing you to earn anywhere from $50 to $300, depending on the amounts of your direct deposits, within a 30-day period.

Marcus by Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a Member FDIC.
  • Annual Percentage Yield (APY)


  • Minimum balance

    None to open; $1 to earn interest

  • Monthly fee


  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee


  • Overdraft fees


  • Offer checking account?


  • Offer ATM card?


Terms apply.

SoFi Checking and Savings

Information about Sofi Checking and Savings has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.
  • Monthly maintenance fee


  • Minimum deposit to open


  • Minimum balance


  • Annual Percentage Yield (APY)

    Members with direct deposit earn 1.80% APY. Members without direct deposit will earn 1.00% APY.

  • Free ATM network

    55,000+ fee-free ATMs within the Allpoint® Network

  • ATM fee reimbursement


  • Overdraft fee

    No-Fee Overdraft Coverage is available; however, SoFi requires $1,000 of monthly direct deposit inflows to unlock it

  • Mobile check deposit


See our methodology, terms apply.


  • No minimum deposit to open an account
  • 1.80% APY with direct deposit
  • 2-day-early-paycheck automatically when you set up direct deposit
  • Save your change automatically with Roundups and set savings goals with Vaults
  • Get up to 15% cash back at local establishments
  • No foreign transaction fees


  • No reimbursement for out-of-network ATM fees
  • Not a standalone checking or savings account

Another important (but less talked about) way to save money is by using a certificate of deposit, or CD. This type of savings account holds a fixed amount of money for a fixed amount of time and in exchange, you'll receive the interest paid on your balance. While CDs typically pay higher amounts of interest than a high-yield savings account, keep in mind that you'll need to abide by the holding period set by the account issuer.

Ewing recommends exploring CD accounts if you don't plan on beginning your home search for several more months or years. The Ally Bank High-Yield CD account offers timeframes that range from three months to five years, and is definitely worth considering.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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