First-time buyers can find support even as mortgage rates rise above 7%

Buying a starter home has become more difficult as mortgage rates climb above 7%, while elevated prices continue to price many younger adults out of the market.

Kate Gabriel said her 22-year-old son, Levi, recently began searching for his first home. He checked his credit, met with a real estate agent and started touring houses before discovering that the monthly payment would be too much to handle.

“He’s been, you know, a combination of sad and annoyed,” Gabriel said.

Levi is far from the only one facing that problem. The typical age of a first-time homebuyer has risen to 40, as higher borrowing costs and home prices make ownership harder to reach for younger buyers.

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What help is available?

“I think in terms of affordability it is harder right now from a monthly payment perspective than what consumers have seen in the last 10 to 20 years,” Twin Cities realtor John Ahnemann of Keller Williams Realty Integrity Lakes said.

Ahnemann said Minnesota is considered one of the strongest states for first-time homebuyer assistance. He cited the Minnesota Housing Finance Agency, or MHFA, along with other down payment grants.

“It’s a government program that will allow you the ability to get into homeownership with down payment assistance programs, and you can buy your first home for a thousand dollars,” Ahnemann said of MHFA. “Look into different down payment grants that are available.”

“These programs are typically able to be stacked on top of each other, and there are consumers that can look to receive up to $100,000 in down payment funds, some of which might be forgivable,” Ahnemann added.

Gabriel said Levi’s current plan is to keep saving and wait for conditions to shift toward buyers. She said he has taken a second job delivering pizza for Domino’s to help make that possible.