The appeal of owning a home in America has shaped the demographic landscape for generations. Yet in survey after survey, millennials continue to defy expectation and tradition, balking at home ownership, delaying life milestones, and even having cold feet about moving altogether. But is it really by choice? Not quite.
Regrettably, too many graduates in this demographic find themselves saddled with debt – making the option of taking on even more debt simply out of the question. According to a 2026 report on student loan debt and homeownership, 61% of Millennial renters cited student loan debt as a reason they haven’t bought a home.
Having enough for a down payment and maintaining a low DTI (debt-to-income ratio) are two important components of securing and affording a home loan. The frail bank account of a recent graduate often has little immediate room for building net wealth, resulting in higher DTIs likely to spike interest rates and cause denials.
If you’re one of these young professionals setting out to achieve this key marker of the American dream and are worried about your chances, you’re not alone. Here are a few things you can do to increase your odds of getting a mortgage and owning a home.
Improve Your Debt-To-Income Ratio (DTI)
Your DTI is your monthly debt payments divided by your gross monthly income. Lenders judge your ability to repay your debt using this percentage and lean heavily away from any potential borrowers in the higher range. You can get your number lower by taking some resolute steps, starting today:
- Pay off as much debt as you possibly can. Whatever small ways you can chip away at your debt – they matter. Don’t hesitate to use tax refunds, or any additional cash you can get your hands on for this purpose. You’ll be glad you did later on.
- Take on additional work. A new stream of income, while not always feasible, could improve your DTI. Side gigs, freelance work, and extra hours here and there all count.
- Refinance or consolidate your loans. By extending your term to lower your monthly payment or lowering your interest rate you could potentially improve your DTI. [Keep in mind that if you extend your term it could result in paying more interest over the life of the loan.]
- Consider an Income-Driven Repayment Plan (IDR). If you have federal student loans, you may be able to make your monthly payments more manageable by enrolling in an IDR plan. Payments are generally calculated at 10%-15% of your discretionary income, based on your income and family size. To learn more, please visit www.studentaid.gov/.
IMPORTANT INFORMATION: Please note that if you refinance qualifying federal student loans, you will no longer be eligible for certain federal benefits or programs and waive your right to future benefits or programs offered on those loans, which may include, but are not limited to, Public Service Loan Forgiveness, Income-Driven Repayment plans, forbearance, or certain forgiveness options granted to Parent Plus borrowers. Please carefully consider your options when refinancing federal student loans and consult studentaid.gov for the most current information.
Boost Your Credit Score
Achieving an excellent credit score takes time and can’t be done overnight. While you certainly don’t need to strive for the “800 Club,” you can do a few things to get your score higher in the shorter term:
- Lower your credit utilization. If you’ve got a lot of credit from various cards or other sources, don’t use it all and inch up to the top of your credit limit. That will raise what’s called your credit utilization rate, which could negatively impact your FICO score. Remember that how much debt you owe accounts for 30% of your score. Keep your credit well under the maximum allowed limit, and you may be able to improve to your score.
- Pay bills on time, without exception. It goes without saying that paying your bills on time helps your score. In fact, your payment history makes up 35% of your Fico score calculation, so mark your calendar and stay on schedule.
- Don’t just move it around—work to pay it off. Avoid opening additional lines of credit if you don’t need them, and don’t close accounts just to raise your score. The length of your credit history accounts for 15% of your score, so keep this in mind when you decide which accounts to close or open.
Down Payment and First-Time Homebuyer Assistance Programs
Many people struggle to put a down payment on a home—especially the traditional benchmark of 20%. Fortunately, there are a few ways to achieve that coveted percentage that can get you a lower interest rate and more equity in your home right off the bat. You may be able to chip away at closing costs, as well.
- Down Payment Assistance programs. State and local programs such as down payment grants, second mortgages and matched savings programs can help lend you money, or match your contributions, in order to reach your down payments needs. There are certain rigid qualifications for these programs, but they might be the right option for some.
- Federal/state first-time homebuyer options. Some federal programs, such as FHA loans offer low down payments and/or low closing costs options that can help first-time buyers—which can be helpful when you’re balancing student loans and other debt loads. Individual states may also have their own first-time home buyer programs and assistance offerings that can help with closing costs, down payments, and more. To learn more about your state-specific resources, visit HUD.gov.
Consider Co-Borrowing
Ever thought about sharing a property with a friend? Don’t mind the idea of co-owning a condo, and renting it out while you’re away for some much-needed supplemental income? Sharing may not be for everyone, but for those keen on the concept, a joint-applicant (co-borrower) on a loan could have some advantages. Depending on where you both stand financially, combining your incomes and credit standings could mean easier approval or qualifying for a higher loan balance. Or if you pool your savings for a bigger down payment, you may be able to save money with a lower monthly payment or pay less interest in the long-term. Also, keep in mind that as a co-borrower you would be responsible if the other borrower failed to pay their share and the home loan would appear on both parties’ credit reports as well.
But if the idea of a ‘forced friendsgiving’ or shared vacation time isn’t for you, you could also consider asking a parent, relative, or trusted friend to be a co-signer (rather than co-owner), or guarantor on your loan.
If All Else Fails…
Focus on your student loan repayment strategy to find freedom from student loan stress, and keep your eye on the prize. More likely than not, some careful planning and budgeting for your future will get you towards your home ownership goals—even if you can’t taste it just yet. We’re here to help you get a step or two closer to your ambitions—whether that’s a house in the hills, a trip overseas, or anything in between.
