Despite limited inventory, first-time homebuyers remain optimistic and committed to entering the market, according to TD Bank’s annual First-Time Homebuyer Pulse survey. The survey revealed that 74% of respondents are optimistic about the housing market, buoyed by a recent dip in mortgage rates. Nearly half (47%) are actively saving for a down payment, demonstrating strong motivation despite affordability concerns.
Affordability and rising interest rates continue to pose challenges, with 64% worried about home affordability and 62% concerned about balancing homeownership with other inflation-driven expenses. Buyers are responding proactively, with 88% improving their credit scores and 51% actively paying down debt. Additionally, about one-third have received down payment assistance from family.
Many first-time buyers feel overwhelmed by the homebuying process (55%), prompting greater reliance on mortgage professionals for guidance. Approximately, 22% of buyers have created personalized homeownership budgets with mortgage brokers, with another 26% planning to do the same. Confidence among low- to moderate-income (LMI) buyers is notably increasing, with 61% now feeling knowledgeable about the mortgage process and 66% aware of down payment assistance programs.
As limited housing supply continues to challenge buyers, 31% of first-time homebuyers are turning to newly constructed homes or custom builds. Younger Millennials are particularly attracted to new builds, with 19% pursuing custom home projects. However, labor shortages, land availability, and rising material costs complicate the construction landscape.
Key considerations for first-time buyers include proximity to family (29%), viewing homeownership as a long-term investment (88%), and factoring comprehensive homeownership costs into their budgets (50% of Millennials). Additionally, traditional notions of a 20% down payment are fading; 43% of LMI respondents now believe 10% is sufficient, highlighting the growing appeal of affordable mortgage programs.
