November 29, 2023

Housing Finance Development

It's Your Housing Finance Development

How a Gen Zer Used a First-Time-Homebuyers Loan to Buy a Condo

  • Elizabeth Willard is a Gen Zer who became a homeowner without the help of a spouse or roommate. 
  • Willard used her state’s first-time-homebuyer program to afford a mortgage for her home purchase.
  • Her story is a reminder that there’s still hope for Gen Z homebuyers. 

When 22-year-old Elizabeth Willard was outbid on her third consecutive home offer, the computer engineer knew something had to give. Since she wanted to stay within her budget of $350,000 — she knew it wouldn’t be her wallet.

“I put in about three offers, a few $20,000 to $30,000 over asking,” Willard said, “and still got outbid by people paying in cash.”

The Portland, Maine, native had heard about a program that could give her a leg up in her home-purchase journey. She found more than that — a first-time-homebuyer loan program and a new housing development that aimed to provide homebuyers like her with affordable housing options.

“From there on, I got extremely lucky,” she said. “I don’t really know how. I lucked into one thing after another.”

For many first-time homebuyers — especially Gen Zers — achieving homeownership is difficult. Although Willard is employed in a well-paying industry and has a larger budget than most Americans her age, finding an affordable home is still a challenge. The median home price in Willard’s state sits above $470,000, even higher than the nationwide median of $430,000.

While home-price growth has slowed in Maine and other pockets of the country, many buyers are still priced out of the market, and mortgage rates are on the rise. Programs like the one that helped Willard could give buyers a better chance at achieving homeownership. 

“First-time-homebuyer programs exist, and they’re designed to help anybody who wants to buy a home,” she said. “I wish more states adopted these programs, and that they were more universal.”

‘The stars aligned’ in a dark time for housing affordability

Willard knew she needed financial assistance to afford a home purchase. She didn’t receive a nest egg from her parents, and she wasn’t looking to buy with a partner or have a roommate.

After doing some digging, she came across a first-time-homebuyer program offered through the Maine State Housing Authority. When she was awarded a $5,000 state grant and approved for a 5%

down payment

, she set her eyes on a workforce housing development called the Goodwin. 

The development boasts 23 one- and two-bedroom units capped at the price of $300,000. To be approved for Goodwin’s affordable housing units, a person must earn no more than 120% of the state’s average median income.

Willard feared her salary would exceed Portland’s median income of $61,695. This presented her with a conundrum: What if she was considered too wealthy to live at Goodwin but still couldn’t afford other developments in her city?

“The fact that I somehow had to make enough money to qualify for a loan but also had to come below a certain income limit was strange,” she said. “For most people, it would be extremely hard. You’d have to have some amount of generational wealth.”

Finally, she received some good news: She qualified to become a resident at Goodwin. With the help of Maine’s housing authority, Willard became the owner of a 616-square-foot, 1-bedroom and 1-bathroom unit for $260,000.

“I just barely made it under Portland’s median income,” she said. “The stars aligned.” After completing a course with the Maine Housing Authority on homeownership, Willard was approved for a first-time-homebuyer loan, a $5,000 grant to help with her down payment, and a much lower interest rate on her mortgage.

First-time-homebuyer programs become even more valuable as prices get further out of reach

While housing affordability has declined for almost all Americans during the pandemic, no generation has had a worse time than Gen Z. Point2, a real-estate database, said the demographic has experienced the most challenges to homeownership. 

A study that calculated how much Americans could afford to set aside for a down payment on a home in 100 of the country’s largest counties — and assuming homebuyers wished to spend no more than 30% of their income on housing costs — found that Gen Zers couldn’t afford a median-priced home in almost all markets. 

“From as much as $1 million to a little more than $40,000, the price difference between the median home and the home that Gen Zers can actually afford opens a not-so-metaphorical precipice between young people and their homeownership dreams,” researchers wrote.  

With housing affordability almost out of reach for many Gen Zers, first-time-homebuyer programs are as important as ever. Throughout the US, many financial assistance programs can help these buyers in various demographic groups, careers, or geographical locations achieve their homeownership dreams. Willard’s ability to find programs that suited her financial needs is a reminder that young buyers do not have to pursue homeownership on their own. 

If nothing else, it is a sign that there is still hope. 

“There were definitely a lot of moments where I made an offer, and I got a call the next day, and it wasn’t accepted, and I was just so heartbroken,” she said. “But look at what your city or state has to offer first-time homebuyers.”

It worked for Willard — and maybe it could work for you, too.

If you’re a homeowner, prospective buyer, or renter with a story to tell about today’s housing market, contact this reporter at [email protected].