Low mortgage rates, financial assistance from parents, and personal savings are helping first-time buyers stretch their housing budgets more than they thought they could, according to a survey from realtor.com of 1,000 prospective and recent first-time home buyers. More than two-thirds of survey respondents say they are surprised at what they can afford; 47% say their budget is larger than they thought it would be. “The dramatic decline of interest rates in 2020 was a pleasant surprise for many buyers,” says George Ratiu, senior economist at realtor.com. “Lower rates allowed many buyers to stretch and buy more expensive homes while keeping their monthly budget the same.”
First-time buyers also are saving for a home faster than they expected. Half of recent first-time buyers surveyed say they were able to save for a home in less than three years by putting aside a portion of their paycheck each month, cutting out discretionary spending, and saving lump-sum payments like tax refunds. Also, many first-time buyers are getting help from their family: 52% of Americans who bought their first home in 2020 say they received downpayment assistance from friends or family, most notably their parents.