Here’s How Gen Z Buyers Can Cover a Down Payment Without Family Wealth
Homeownership is both a dream and a reality for Gen Zers, depending on who you ask — or which source you consult. Headlines — like this one by Clever — proclaiming the largest generational homeownership gap on record rest alongside reports that more Gen Z men and women are buying homes, despite the average age of first-time buyers having climbed to 40 amid historically unaffordable prices.
Further underscoring just how dire the situation might be for certain Gen Zers aiming for a solid down payment: Recent LendingTree data suggests that one-third (33%) of Gen Zers wouldn’t have been able to buy their current home without help on the down payment. And of these, more than half (51%) noted that their family, friends, an inheritance or a trust fund were the source of said help.
So what can young Americans looking to cover a down payment do if family wealth simply isn’t an option when it comes to financial backing? Let’s take a look.
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Stop Chasing After the 20% Down Payment Line
While it’s obviously ideal to have the much-desired 20% down payment on your first home to avoid private mortgage insurance (PMI), Gen Z homebuyers — particularly those with a more modest income and little to no family wealth — might have make do.
Even Rachel Cruze of Ramsey Solutions, known for having financial views on the stricter side, conceded on this topic. Cruze said a 5% to 10% down payment is "fine," with the understanding that you'll be paying PMI for a while longer.
And if you qualify for a HomeReady mortgage under Fannie Mae (you can check if you’re eligible via the Area Median Income Lookup Tool), you might even be able to get by with 3% down. HomeReady could also net you a cool $2,500 borrower credit, more affordable mortgage insurance and access to a roster of funding sources — “including gifts, grants and Community Seconds.”
Compromise May Be a Necessity for Potential Gen Z Homebuyers
Compromise may be a good idea, especially if it lands you in the new digs you’ve been dreaming of. You wouldn’t be alone in having to do so, either.
Comprehensive 2025 survey data put out by Bank of America shows that nearly a third (30%) of Gen Zers sought out a second job in order to finance their down payment. Work can be exhausting, but it pays.
If a second gig or side hustle doesn’t vibe with you, it might be worth teaming up with your brother(s) or sister(s). Bank of America said that almost a quarter (22%) of Gen Z homebuyers did just that to seal the deal on a new residence.
Another thought: Cutting expenses today in order to build a down payment tomorrow could also mean moving back in with your parents — or a close friend willing to cut you a break on rent and groceries. A significant proportion of Gen Z survey respondents (34%) said they’d consider this move if it meant they could eventually afford their own home.
Not Everyone Needs (or Can Afford) To Live in High-Demand Cities
Lastly, some Gen Z homeowners have found increased odds of success by simply going where the demand isn’t sky-high, electing to purchase properties in the Midwest and South where median home prices are significantly lower than the national average, per Investopedia.
Omaha-Council Bluffs, Des Moines, Cincinnati, Wichita, Little Rock, Jackson and Grand Rapids were just some of the metro areas listed as having a higher-than-usual share of Gen Z homebuyers as a result of a more affordable local real estate market. Scoring a bargain on a roomy property in these markets might even feel like a bigger win than something less impressive in a squeezed, overpopulated city.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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