New data from Bank of America shows that family support often plays a pivotal role in helping first-generation homebuyers reach the major milestone of purchasing their first home. Families of first-generation homeowners often instilled in them the dream to buy a home and an understanding of the value of owning – whether they were able to provide financial support, or simply motivation.
“For many first-generation homeowners and their families, homeownership has a unique importance, given the collective efforts to overcome financial challenges that can often span generations,” said AJ Barkley, Head of Neighborhood and Community Lending at Bank of America. “Achieving this goal can create a sense of pride and accomplishment that resonates both for the buyer and those closest to them, including their parents and future generations.”
Published today, Bank of America’s 2021 Homebuyer Insights Report: First-Generation Homeowner Spotlight is based on a survey of U.S. adults who currently own a home or plan to in the future. The study found:
- Seven out of 10 first-generation homeowners (69%) say the importance of homeownership has increased over the past year.
- 61% of first-generation homeowners say the importance of building equity has increased, compared to 39% of non-first-generation homeowners (meaning those whose parents or grandparents owned a home).
- 73% of first-generation homeowners also have a newfound appreciation for the safety and security that homeownership provides, compared to 60% of non-first-generation homeowners.
- Twice as many first-generation homeowners (43%) bought a home because they felt their parents expected it, compared to non-first-generation homeowners (20%).
- For some, family involvement goes even further, with 37% of first-generation homeowners saying they received financial assistance from their parents to buy a home.
- 74% of first-generation homeowners and 57% of non-first-generation homeowners expect to buy another home in the future.
Sheena C. is a first-generation homeowner and Philadelphia native who moved to Detroit several years ago. “I view homeownership not only as a way to build generational wealth for me and my young daughter, but to also have a stake in a neighborhood,” said Sheena. “I immediately connected to the vibrant community in Detroit and decided to put down roots.”
The path to homeownership begins with saving and building credit
Homeownership remains one of the most common methods for families and individuals to build wealth, as homes historically appreciate over time. When the home increases in value, so does the amount of equity that is available to the homeowner. It is this equity that can be used to support the next generation.
However, the path to homeownership begins long before searching for a home. “The journey toward homeownership – whatever your timeline – actually begins with your first banking experience and continues as you learn to budget, save and establish a solid credit history,” said Barkley. “Building financial confidence takes time and requires making early, consistent and informed decisions that set you up for success.”
Prospective homebuyers say saving for a home is a financial priority, but they face hurdles, much like the generations before them. Only 24% of prospective buyers are proud of their credit score and 89% say they know there’s more they could do to save money.
Overcoming barriers through planning and assistance
“While homeownership may feel like a distant dream, knowing the stepping stones and solidly planting one foot in front of the next can put you closer to your goal,” says Barkley.
Bank of America is helping people get on the right path with a range of solutions starting with help managing spending and saving patterns and practicing responsible credit behavior. The bank offers innovative low down payment mortgages, as well as down payment and closing cost grants (no repayment required) designed to make homeownership accessible and affordable for those with a healthy financial picture.
While many prospective buyers can afford monthly mortgage payments, they report high rent costs (57%) and expensive home prices (54%) are making it harder to save for the upfront costs of homeownership. That’s why Bank of America’s Community Homeownership Commitment® was created – to address the challenges many would-be buyers face. Already, the Community Homeownership Commitment has provided over $270 million in grants to more than 29,000 homebuyers.
Sheena, the Detroit homeowner, is just one of many who took advantage of Bank of America’s Down Payment Grant and America’s Home Grant® to close on a home earlier this year. “After hours of research to understand the home buying process, things just aligned when I applied and qualified for down payment assistance from Bank of America,” she said. “I knew that help with upfront costs would enable me to replace rent payments with regular mortgage payments, giving me a stronger sense of stability that a month-to-month lease could not offer.”
