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Mortgages Reports

Why Aren’t Millennials Becoming Homeowners? Some Cite a Lack of Knowledge or Savings, Others Point to Student Debt

Earlier in August, LendEDU released a report that analyzed data from a survey of current millennial homeowners to better understand how the largest living generation is approaching the home-buying process.

As a compliment to that report, LendEDU also wanted to look into millennials that are not yet homeowners to see where they stand in their journeys towards purchasing a home, or if they even plan on targeting that financial milestone.

Have bad memories from the 2008 financial crisis or even a lack of knowledge when it comes to mortgages prevented millennials from becoming homeowners? How long do millennials anticipate it will take to finally own a home, and will they put off other life goals to buy one?

Do millennials have a good grasp of crucial mortgage information? When they do start searching for a home, how will they attack the process, and will they seek a mortgage from a traditional bank like Wells Fargo or a non-banking lender like Quicken Loans?

This report explored all of those questions and more. With millennials growing up during the height of the sub-prime mortgage-induced recession, in addition to being a tremendously important generation due to its size and earning power, millennials’ thoughts towards homeownership and mortgages are fascinating to study.

In addition, the fact that this study focuses on millennials that are not yet homeowners makes the topic doubly interesting as we can get a better feel for where the generation might take the real estate and mortgage markets.

Full Survey Results

(The following data derives from an online survey of 1,000 millennials between the ages of 23 and 38.)

(1) Do you currently own a home?

  • 58% of respondents answered “Yes”
  • 42% of respondents answered “No”

(2 — Asked only to those who answered “No” to Q1) Do you wish to become a homeowner at some point in your life?

  • 89% of respondents answered “Yes”
  • 11% of respondents answered “No”

(3 — Asked only to those who answered “No” to Q1 & “No” to Q2) Have memories from the 08-09 financial crisis, spurred by sub-prime mortgage lending, led you to not want to become a homeowner?

  • 13% of respondents answered “Yes”
  • 67% of respondents answered “No”
  • 20% of respondents answered “I’d rather not say.”

(4 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) How many years do you anticipate it will take you to become a homeowner?

  • 6% of respondents answered “Less than 1 year”
  • 65% of respondents answered “1 to 5 years”
  • 21% of respondents answered “6 to 10 years”
  • 6% of respondents answered “10 to 20 years”
  • 2% of respondents answered “Over 20 years”

(5 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Do you believe that a lack of knowledge when it comes to homeownership and mortgages has prevented you from already owning a home or taking longer than expected to become a homeowner?

  • 55% of respondents answered “Yes”
  • 41% of respondents answered “No”
  • 4% of respondents answered “I’d rather not say.”

(6 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Are you putting any of the following life goals on hold until you finally purchase a home? (Select all that apply)

  • 13% of respondent answers were “Marriage”
  • 16% of respondent answers were “Having children”
  • 13% of respondent answers were “Having a pet”
  • 14% of respondent answers were “Changing jobs”
  • 6% of respondent answers were “Other”
  • 38% of respondent answers were “None of the above”

(7 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Are any of the following preventing you from already being a homeowner? (Select all that apply)

  • 26% of respondent answers were “Lack of savings”
  • 24% of respondent answers were “Low income”
  • 10% of respondent answers were “Overwhelming student loan debt”
  • 5% of respondent answers were “Overwhelming credit card debt”
  • 6% of respondent answers were “Other debt”
  • 17% of respondent answers were “Poor credit”
  • 8% of respondent answers were “Haven’t found the right home yet”
  • 3% of respondent answers were “Other”
  • 1% of respondent answers “None of the above”

(8 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Have you previously applied for a mortgage and have been rejected?

  • 10% of respondents answered “Yes”
  • 88% of respondents answered “No”
  • 2% of respondents answered “I’d rather not say.”

(9 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Do you anticipate that you will use a mortgage to finance the purchase of your home?

  • 75% of respondents answered “Yes”
  • 25% of respondents answered “No”

(10 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you intend to get multiple quotes to compare the best offers or just one quote?

  • 78% of respondents answered “Multiple quotes”
  • 6% of respondents answered “Just one quote”
  • 16% of respondents answered “I’m not sure.”

(11 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you think you will handle the vast majority of the process online or through an in-person mortgage broker or lender?

  • 22% of respondents answered “Online”
  • 52% of respondents answered “In-person”
  • 26% of respondents answered “I’m not sure.”

(12 — Asked only to those who answered “No” to Q1, “Yes” to Q2, & “Yes” to Q9) When you eventually start shopping for a mortgage, do you intend to take out a mortgage with a traditional bank like Bank of America or Wells Fargo or a non-banking lender like Quicken Loans or Loan Depot?

  • 53% of respondents answered “A traditional bank”
  • 8% of respondents answered “A non-banking lender”
  • 39% of respondents answered “I’m not sure.”

(13 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) As a percentage of the total purchase price, generally what is the minimum down payment required to purchase a home?

  • As a percentage of the total purchase price, the average millennial respondent answered “37%.”

(14 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) True or False: If you fail to put 20% down to purchase a home, you must pay private mortgage insurance (PMI)?

  • 60% of respondents answered “True” (Correct)
  • 40% of respondents answered “False”

(15 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) From start to finish, how many days do you think it typically takes to get a mortgage?

  • The average millennial respondent answered “72 days” when asked how long the mortgage process typically takes from start to finish.

(16 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) Generally speaking, what do you believe the minimum annual income needed is to take out a mortgage?

  • The average millennial respondent answered “$58,818” when asked for the minimum annual income needed to take out a mortgage.

(17 — Asked only to those who answered “No” to Q1 & “Yes” to Q2) True or False: In order to qualify for a mortgage, you must have a perfect credit score?

  • 33% of respondents answered “True”
  • 67% of respondents answered “False” (Correct)

Observations & Analysis

What’s Preventing Millennials From Homeownership? Some Cite Tight Budgets, Poor Credit, and High Levels of Debt

We asked millennials that are not yet homeowners but still aspire to be one day some reasons as to why they haven’t hit that life milestone?

Taking in 26% of all answers, millennials most often cited a lack of savings as the reason why they are not homeowners. Monthly mortgage payments can get quite steep and require a serious financial commitment that usually calls for having at least three months worth of payments stowed away in savings, so this result makes sense.

Other popular answers included “low income” (24%), “poor credit” (17%), “overwhelming student loan debt” (10%), “other debt” (6%), and “overwhelming credit card debt” (5%).

It was concerning, albeit not surprising, to see debt-related answers take up a combined 21% of the answers. The millennial struggle with debt, especially related to student loans, is widely publicized, and it’s quite obvious that this uphill battle is having secondary effects on the wider economy.

The results to this particular question can be taken in a both a positive and negative light.

Positive because it is good to see that millennials are aware of their problems, rather than ignoring them, and responsibly holding off on homeownership as that would only exacerbate their personal finances.

Negative because it is disheartening to see so many members of this generation struggling financially for a plethora of reasons that leave them unable to progress in life.

The Recession Has Scared Off Some Millennials Too

The 2008 financial crisis, otherwise dubbed as the “Great Recession,” was mainly fueled by sub-prime mortgage lending on the part of financial institutions. Simply put, a loosely-regulated mortgage lending industry led to too many consumers getting approved for mortgages even though they would be unable to pay them back.

As this lending practice slowly built itself up over time, the mortgage bubble burst and took practically everything else down with it.

With millennials, now between the ages of 23 and 38, growing up through the thick of this, we wanted to see if the bad taste of 2008 has impacted their home-buying behaviors.

13% of millennials that have no desire to ever become homeowners cited the 2008-09 financial crisis as the reason for that lack of desire. This is not a eye-opening proportion of millennial consumers, but a large enough percentage to at least take notice of it.

Finally, More Than Half Point to a General Lack of Knowledge on Homeownership & Mortgages

Homeownership, especially by way of a mortgage, can be an incredibly complicated topic for the average consumer. Sometimes this complexity leads to intimidation, which can prevent someone from ever taking the jump into homeownership as the LendEDU data seems to indicate.

55% of millennial respondents stated their lack of knowledge on homeownership and mortgages has prevented them from being a homeowner, while 41% did not share this sentiment, and 4% opted not to say anything on the matter.

With more than half of millennial consumers not yet owning a home due to a lack of knowledge in the subject manner, it seems as though there is a massive opportunity lost to get more younger Americans into their own homes. For whatever reason, homeownership preparation is not something that is usually taught at high schools or even colleges throughout the U.S., just like so many other valuable personal finance skills that get ignored.

Plunging into homeownership is not something that should be done without preparation and could be incredibly damaging to someone that does not have their head fully wrapped around it. So, it is good to see that many millennials aren’t buying homes because they are ill-advised on the topic, but maybe some of them would be ready and prepared to purchase a home if they were only taught more about it.

For the economy, the return on investment from homeownership education for younger Americans could potentially be extremely worthwhile.

So, Just How Much Do Millennials Know About Mortgages?

On the topic of millennials lacking knowledge when it comes to mortgages, we actually posed a few quiz-like questions to respondents to more accurately gauge what they knew about the financial product.

For starters, the average member of this generation that is not yet a homeowner is way overshooting the down payment needed to take out a mortgage.

When it comes to mortgage and homeownership knowledge, the majority of millennials have a decent grasp of things, despite seriously missing the mark on a couple of questions.

For example, when asked for the minimum down payment that is typically required upon purchasing a home, the average millennial answer was 37% of the home’s total purchase price. While a 20% down payment is ideal and seen as the status quo mortgage down payment percentage, a home-buyer can actually make a down payment as low as 3% depending on the type of mortgage they are using.

With 55% of millennial respondents citing a lack of mortgage knowledge as a reason why they have yet to become a homeowner, it would not be surprising to find out that many are simply overestimating the down payment necessary upon closing and unnecessarily waiting until they have more cash stowed away for a massive down payment.

Millennial respondents also estimated that the mortgage process takes a lot longer than it actually does, with the average answer from our survey being 72 days from start to closing. In reality, the mortgage process usually takes around 30 days, but could possibly be extended to 60 days during high-volume months.

When it came to the true or false questions, the majority of millennials answered correctly for both. 60% knew that private mortgage insurance (PMI) is required if a down payment is lower than 20%, while 67% correctly answered that a consumer does not need a perfect credit score to qualify for a mortgage.

However in both instances, the percentage of respondents answering incorrectly was a bit higher than it should be, especially for the two questions that reflect crucial components of the mortgage experience. 40% of millennial consumers might eventually make a down payment lower than 20% and then get unexpectedly tacked for PMI, while one-third of these folks might be unknowingly holding out on applying for a mortgage until they build their credit up to a perfect score.

62% of Millennials Are Delaying Other Life Milestones Until They Finally Own Their Own Home

Amongst those millennial consumers that are not yet homeowners, we wanted to see where homeownership ranked on their list of priorities, and if they were putting anything on hold until they had a house they could call their own.

While 38% of respondents indicated that they are not putting off anything until they check that box, 62% did.

Leading the way was 16% of respondents not having children until homeownership is achieved, while 13% of millennials are delaying marriage and 13% are waiting to have a pet. Another 14% are going to wait to change jobs, while 6% indicated something else not listed.

The results of this particular question prove just how vital homeownership trends are to the entire economy. Consumers in this country desperately want to own homes as it is seen as the pinnacle of achieving the American Dream. This desire is so strong that many millennials are holding off on other huge milestones that also have an impact on the economy, like changing jobs and having children.

For example, by changing jobs, you are not only hopefully increasing your salary, which in turn will pump more money into the consumer economy, but you are creating a job opening for somebody else to contribute to the economy. Or, if you have children or pets, you are spending money on those things that will help businesses.

However, none of that will happen as frequently if younger Americans are not first achieving homeownership, according to our survey. In other words, owning a home is the first domino that needs to fall for many consumers before they start targeting other goals that will also trickle down to benefit smaller components of the economy.

If nothing else, the results to this question just prove how seriously many millennials crave a house for themselves.

Despite Widespread Changes to the Industry, Millennials Still Want a Traditional Mortgage Experience

With the inclusion of technology in all financial matters, in addition to evolving trends in mortgage lending industry after the recession, LendEDU’s data still indicates that millennials favor a more old-fashioned mortgage experience.

Looking at the results of Question 11, the percentage of millennials that wanted an in-person mortgage experience (52%) more than doubled the percentage that preferred an online mortgage process (22%). Another 26% were undecided either way.

With the technological and online capabilities of financial institutions being more powerful than ever before, the results of this question were quite surprising. Millennials are an incredibly tech-savvy generation that seem to prefer solving everything with a smartphone or through Google, yet still, they want to deal with a real human being when going through the mortgage process.

Perhaps because large amounts of money are at stake, in addition to sensitive personal information, millennial consumers place more trust in a human dealing with these things rather than software. Whatever it is, the results to this question bode well for mortgage brokers and financial advisors who might be sweating the onslaught of financial technology.

The second tab of the above graphic relates to another question from the survey with answers that bucked current trends. 53% of millennial respondents stated that they would prefer to take out a mortgage with a traditional bank, like Wells Fargo, while a mere 8% opted for a non-banking lender like Quicken Loans. 39% were not sure.

This was surprising for two reasons.

First, non-banking lenders have rapidly increased their market share of mortgage originations in the last decade. Specifically, the Wall Street Journal recently reported that non-banks now hold a 51.7% share of mortgage originations, up from 8.9% in 2009.

Second, with millennials experiencing the Great Recession firsthand, one would think their perception of traditional banks, especially for mortgage-related purposes, would be tainted as the banks were the main culprits for the sub-prime mortgage lending that ignited the crisis.

However, it appears that none of this really holds water as millennials quite convincingly indicated that they would rather take out a mortgage with a bank like Wells Fargo instead of a non-banking lender like Quicken Loans.

Judging from the results of these two questions, it looks as though traditional banks can join human mortgage brokers and financial advisors in tempering any fears they might have had about losing considerable business from millennials due to a rapidly-changing mortgage landscape that might not be as susceptible to change as previously thought.

Mortgage Tips

The home-buying process is stressful enough, but when you also need to take out a mortgage, it can become quite intimidating.

LendEDU has a few tips below for people that are looking to purchase homes with mortgages.

Do Your Research & Compare Your Options

There are many mortgage lenders out there, so when shopping for a mortgage the best thing you can do is research as many as possible and compare them against one another.

In addition, you should also get a general sense of what your mortgage budget looks like, including the amount that you can afford in monthly mortgage payments. LendEDU’s mortgage calculator can help you set your home-buying budget.

Further, there are mortgage products that are designed exclusively for certain consumers. For example, a veteran can look at a VA home loan.

Look Into Refinancing Your Mortgage

If you already have a mortgage but aren’t crazy about either your mortgage interest rate or your terms, you can always look into refinancing your mortgage.

LendEDU’s mortgage refinance calculator can be of great assistance if you are considering refinancing your mortgage in order to hopefully receive the best possible mortgage rate.

Consider Tapping Into Your Home’s Equity

If you are a homeowner, you might have the ability to tap into your home’s equity through a home equity loan or home equity line of credit (HELOC) to access additional financing.

Even if you’ve already paid off your mortgage, a home equity loan is still an option for you. If you are looking into either of these products, be wary of common home equity loan closing costs and fees.


All of the data in this report derives from an online survey commissioned by LendEDU and conducted by polling company Pollfish.

In total, 1,000 millennial Americans were surveyed for this particular poll. According to Pew Research Center, millennials are currently between the ages of 23 and 38. Respondents were screened using Pollfish’s age filtering feature to ensure we surveyed appropriately aged consumers.

This particular survey was conducted over a two-day span, starting on July 22, 2019 and ending on July 23, 2019. All respondents were asked to answer all questions truthfully and to the best of their abilities.

See more of LendEDU’s Research