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Buying your first home is one of life's most exciting milestones, but for many buyers in 2026, it may also feel overwhelming. Rising home prices, higher rents, student loan debt, and saving for a down payment have created new financial challenges that many first-time buyers must navigate before purchasing a home.
The good news? These challenges don't necessarily mean homeownership is out of reach.
Every day, buyers successfully purchase their first home by creating a plan, understanding their financing options, and working with experienced professionals who can help guide them through the process.
In fact, while the path has become more competitive, thousands of first-time buyers continue to achieve homeownership each year.
According to the National Association of REALTORS® (NAR), first-time homebuyers accounted for 21% of all home purchases in 2025, the lowest share since NAR began tracking the data in 1981. That statistic reflects the financial realities many buyers face today, but it also highlights how important preparation has become.
If you're hoping to purchase your first home, understanding these common challenges can help you prepare and move forward with confidence.
For many buyers, saving enough money for a down payment is the biggest hurdle.
One of the most common misconceptions is that you need a 20% down payment to buy a home. While putting more money down may reduce your loan amount, and on some conventional loans may eliminate private mortgage insurance (PMI), many qualified buyers purchase homes with significantly less.
Depending on the loan program and your financial qualifications, there may be low down payment options available.
The NAR report also found that 26% of Younger Millennials received down payment assistance from family members in the form of a gift or loan, demonstrating that many buyers combine multiple resources to achieve homeownership.
In addition to family assistance, many state and local housing agencies offer down payment assistance programs that may help eligible buyers with upfront costs.
Tip: Speaking with a mortgage professional early can help you understand which loan programs and assistance options may be available based on your individual circumstances.
Many first-time buyers are trying to save for a home while paying today's rental prices.
According to NAR, high rental costs remain one of the leading reasons buyers delay purchasing a home. When a significant portion of monthly income goes toward rent, it can take longer to build savings for a down payment, closing costs, and emergency reserves.
If you're currently renting, consider creating a dedicated home savings plan by:
Even small, consistent contributions can make a meaningful difference over time.
Student loans continue to be a reality for many younger buyers.
The NAR report found:
• 39% of Younger Millennials reported student loan debt, with a median balance of $30,000.
• 27% of Older Millennials also carried student loan debt, with a median balance of $40,000.
While student loan debt can affect your finances, it does not automatically prevent you from qualifying for a mortgage.
Lenders look at your overall financial picture, including your income, credit history, available assets, and debt-to-income (DTI) ratio. Every buyer's situation is different, which is why it's important not to assume you won't qualify without speaking to a mortgage professional first.
Credit card balances were another leading reason buyers delayed purchasing a home, according to NAR.
One of the factors lenders consider during the mortgage process is your debt-to-income (DTI) ratio, which compares your monthly debt payments to your gross monthly income.
Reducing revolving debt before applying for a mortgage may strengthen your financial profile and improve your purchasing power.
Some helpful strategies include:
Home prices remain higher than many buyers expected just a few years ago, making affordability an important consideration.
While it's natural to wonder if you should wait for market conditions to change, it's impossible to predict future home prices or mortgage rates.
Rather than trying to perfectly time the market, many buyers benefit from understanding what they can comfortably afford today and creating a plan that aligns with their long-term financial goals.
A mortgage pre-approval can help you better understand your purchasing power before you begin shopping for a home.
Preparing for homeownership doesn't always require dramatic lifestyle changes.
According to NAR, many successful buyers reported reducing spending on luxury purchases, entertainment, and other non-essential expenses while saving for a home.
Simple, consistent financial habits, combined with a realistic savings plan, can help move you closer to your goal of homeownership.
Buying your first home begins long before you tour your first property.
Some of the best ways to prepare include:
The more prepared you are, the more confident you'll feel when the right home becomes available.
Can I buy a home with student loan debt?
Yes. Many first-time buyers purchase homes while still making student loan payments. Mortgage qualification is based on your overall financial profile, not simply whether you have student loans.
Do I need a 20% down payment?
No. Depending on the loan program and your qualifications, there may be financing options available with lower down payment requirements. A mortgage professional can help you understand what options may be available to you.
What is debt-to-income (DTI) ratio?
Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. Lenders use DTI as one factor when evaluating mortgage applications.
What is down payment assistance?
Down payment assistance (DPA) programs may help eligible homebuyers with their down payment and, in some cases, closing costs. Eligibility requirements vary depending on the program.
What credit score do I need to buy my first home?
There is no single credit score requirement that applies to every mortgage. Credit guidelines vary by loan program and lender, and your overall financial profile is also considered during the approval process.
Is getting pre-approved worth it?
Yes. A mortgage pre-approval helps you understand your estimated purchasing power before you begin shopping and may strengthen your offer when you find the right home.
Every first-time homebuyer has a unique financial situation, goals, and timeline. While today's market presents challenges, there are also more financing solutions and educational resources available than ever before.
At Homestead Funding, we're committed to helping first-time buyers understand their options and make informed decisions every step of the way. Whether you're just beginning to save or you're ready to get pre-approved, our experienced Loan Originators are here to answer your questions and help you create a plan that's tailored to your goals.
Ready to take the next step? Contact a Homestead Funding Loan Originator today to explore your financing options and begin your journey toward homeownership.
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Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.
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