The vast majority of people buying homes are financing their purchase through a loan. According to the Home Buyer and Seller Generational Trends Report from the National Association of Realtors®, 88% of buyers finance their home purchase. And when you look at the younger generation of buyers, that number jumps to a whopping 98%. And that younger generation of buyers? They’re exploring non-traditional lending options in record numbers.
According to the report, only 55% of buyers under the age of 37 used a traditional loan to finance their home—meaning nearly half purchase a home using non-traditional financing options.
Perhaps the biggest reason behind the upward trend in younger buyers exploring non-traditional loans is lower down payments. While traditional loans typically require a 20% down payment, non-traditional loans require much less. And because saving for a down payment is a major obstacle for younger buyers (according to the report, 24% of buyers aged 37 or under listed it as the most difficult part of the home buying process), loans that require less of an upfront investment are much more appealing.
If you’re a younger buyer thinking about purchasing a home, there’s a reason your peers are exploring non-traditional loan options. You might want to consider doing the same.