A wise real estate broker said to me when we were buying our second home, long before I was in the business, “buy as much as you can afford.” In other words, stretch to the limits of your financial ability even if it makes you a little nervous; it will reward you in the future.
Today’s first-time homebuyers are giving up $8 Starbucks Frappuccinos and driving Chevys instead of a BMW to afford a home. They’re starting to sound like their grandparents’ generation, sacrificing the frills and compromising to buy that first home.
These first-time homebuyers are facing interest rates that surged to 7.28% in the first week of October. High home prices relative to median income, student loans and inflation are resulting in one of the least affordable housing markets in decades. According to data from the Federal Reserve, 29% of Americans between the ages of 25 and 29 owned their homes in 2025, which is down from 32% a decade earlier.
First-time buyers who truly cannot afford to buy a home are looking for options they may never have considered before. Looking outside their preferred location for a home is the first obvious option – we can’t all live in a high-end exclusive location. Also, compromising on size will open up available properties you may not have known existed.
In addition, there are strategies to lower monthly mortgage payments. When rates were low and homes were also more affordable, the conventional mortgage was the best option for most homebuyers, but now some of the previous mortgage options are being looked at again.
Putting down more cash will lower the amount of mortgage you need to qualify for and keep your monthly payment down. It’s not unusual for family members to extend money to help first-time buyers get that first home.
Adjustable-rate mortgages will lower your monthly payment by starting with a lower interest rate that will adjust up depending on the program chosen hopefully when you may be in a better financial position.
Typically, the lower fixed rate will be for a period of three to 10 years before returning to market rates once the period ends.
Lenders are fussy about qualifying buyers for an adjustable-rate mortgage. They will require proof or a way to verify future income or ability to meet the new interest rate when the term ends.
The latest interest rate is the highest in four years and is frustrating buyers. However, older homeowners point out that before 2001 mortgage rates were just about always above 7%, and in the 1980s, they reached as high as 18.63%, according to Freddie Mac. The challenge in this market is that home values are increasing because of low inventory. Remember the inventory is low because of the high volume of low-interest-rate mortgages keeping homeowners in their current homes.
Every generation has to find its own way to homeownership, but there is a way for every generation if it’s willing to find it. As my wise friend told me, stretch to the highest property you can afford and watch it appreciate.
