Removing the Barriers for First-Time Homebuyers

Helping our members purchase their first home is one of my favorite parts about my job at BECU. It’s a major milestone that is equal parts terrifying and exhilarating, and it’s an important part of someone’s journey to financial health.

I bought my first home at 25. I’ll be the first to admit it was different back then.  I wasn’t facing the same obstacles that those in their 20s now experience: crippling student debt, the rising costs of homes and rents, and more. And, even with my knowledge of someone working within the financial industry, it was still a scary experience.

So, it comes as no surprise to me that millennials are often delaying this major life purchase. There is hope, however. Our data shows that helping remove initial barriers on the pathway to homeownership can help more young people take the steps toward owning their first home.

As Washington’s leading not-for-profit credit union, BECU is dedicated to increasing the financial health of the communities we serve. And this year, we are seeing more people purchase or refinance their homes than we expected because rates are remaining low.

One way we are helping members realize the dream of homeownership is through our First-Time Homebuyer Grant program. We knew that many of our members were qualified homebuyers; they simply needed help clearing the hurdle of a down payment. As a result, BECU allocates $1 million annually in grant funds to reward eligible members with up to 2% (maximum of $6,500) toward the down payment or closing costs on their first home. And due to popular demand, we’re dedicating an additional $500,000 to the program this year.

Since we launched the program in February 2018, $1.6 million in grant funds have helped our members purchase over 300 homes. Looking at the data, we found that more than 80% of these grant recipients were millennials. Not only are they interested in buying a home, but they’re actively seeking support to achieve that goal. We’ve also seen that the majority of our millennial buyers are not applying for mortgages online, but rather want to speak to a mortgage expert in-person who can walk them through the process.

I work closely with our team at BECU that works hard to make the home buying process as easy and stress-free as possible. With their insights, and having gone through the process a few times myself, I’ve picked up some tips that may come in handy for millennials or anyone interested in making the move towards homeownership for the first time:

• Determine What You Can Actually Afford – Everyone has their idea of what a dream home looks like. Mine happens to be one with a view. It’s vital that you figure out a budget that fits within your means. Use a mortgage calculating tool or meet with a dedicated mortgage advisor who can review your current financial situation and help you determine what you can afford – giving you a jumping off point to begin your search.
• Know Your Credit Score – It pays to have good credit. A low credit score doesn’t just increase the interest rate on your loan, it can increase your closing costs by hundreds (or thousands) of dollars as well. Make sure you’re doing everything possible to continue raising your credit score.
• Be Ready to Move Quickly – Especially in hot markets, work with an experienced agent who can help you identify what you can and cannot compromise on. And get pre-qualified for a loan. In fact, some realtors require their clients to get pre-qualified before they even start showing them houses.

While certain financial realities may be restricting millennials’ access to homeownership, much of the hesitation stems from a lack of knowledge about the process and options available to help finance a mortgage. Given the buying power of this generation, those in the mortgage industry need to find more ways to offer financial education resources, support and programs to equip millennials with a holistic view and understanding of the buying process and associated costs. 

BECU is an Equal Housing Opportunity Lender.