Cherry Hill-based TD Bank released findings from its annual First-Time Homebuyer Pulse survey that revealed strong confidence in the housing market and an eagerness to move forward with their homeownership plans despite challenges like affordability and high interest rates.
As mortgage rates have recently started to decrease, as reported by the National Association of Realtors, optimism and demand persist among first-time homebuyers. TD’s annual survey found that three in four respondents (74%) feel optimistic about the current housing market and nearly half (47%) are already saving for a down payment despite trepidation about housing affordability.
“Optimism in the housing market is a positive sign for first-time homebuyers, as it encourages them to become more strategic and adaptable in their journey to homeownership,” said Steve Kaminski, Head of U.S. Residential Lending at TD Bank. “These results tell us that more and more first-time homebuyers have greater confidence in navigating the homebuying journey, and it’s likely because they are better financially prepared and more well-informed during the decision-making process.”
TD Bank surveyed 1,001 Americans planning to purchase their first home in 2025, gathering insights into their outlook on the housing market and how prepared they feel to navigate challenges like home inventory and purchasing costs.
Buyers Assess and Plan for Financial Readiness Amid Affordability Challenges
While 79% of all respondents believe their personal financial situation is stable and 85% note that homeownership is important to them, many first-time homebuyers still grapple with the rising costs of homeownership. Nearly two-thirds (64%) say they’re concerned with their ability to afford a home in today’s market due to interest rates, while 62% say they’re worried about being able to afford their other expenses on top of purchasing a home given inflation.
In response to rate concerns, many buyers report taking proactive steps to improve their financial readiness. Eighty-eight percent of respondents have taken actions to boost their credit score in anticipation of purchasing a home, with 51% paying down as much debt as possible and 44% ensuring their credit report has no errors.
To combat challenges associated with saving, some first-time homebuyers have turned to family for help, with 33% reporting they received a gifted down payment from family or loved ones.
First-Time Homebuyers Turn to Professionals for Guidance
For many first-time homebuyers, navigating the homebuying process can feel daunting. In fact, more than half of all respondents (55%) agree that they are overwhelmed by the homebuying process. However, they’re tackling these feelings head-on by turning to mortgage professionals for guidance. Twenty-two percent of all respondents have created a personalized homeownership budget with their mortgage broker, while another 26% plan to do so when they meet with a mortgage broker, ensuring they have a clearer picture of what’s affordable and realistic for their unique lifestyle.
Beyond expert advice, confidence is rising among individuals of all financial backgrounds. Three in five (61%) low to moderate income (LMI) respondents feel knowledgeable about the mortgage process, up from 56% in 2024. Moreover, awareness of down payment assistance programs is increasing among LMI buyers, with 66% now in the know compared to 54% who said the same in 2024.
“Resources and guidance help first-time buyers move from initially feeling overwhelmed to feeling more confident and ready to navigate the homebuying process,” said Kaminski. “By leveraging these tools, prioritizing financial readiness, engaging in early discussions with trusted lenders, reducing debt and increasing savings, buyers can make more informed decisions and feel empowered to take the next step toward homeownership.”
Custom homes gain popularity as buyers face limited options
As demand for homeownership remains strong, a limited supply of existing homes continues to challenge first-time buyers. With many struggling to find homes within their budget, new construction is becoming a more appealing option, with nearly one-third of respondents (31%) indicating that they are looking to build their own homes or buy a newly constructed home as opposed to an existing home.
Data shows that younger generations are particularly interested in building their own homes, with 19% of younger Millennials expressing willingness to take on the project, compared to just 8% of Gen X and 13% of all respondents. Even further, 22% of New Yorkers say they are looking to build their own home, finding alternative paths to homeownership in their market.
Even if they’re not building from scratch, first-time homebuyers are still looking to personalize their new homes to their needs, with 23% factoring in repairs and renovations as part of their homeownership budget.
However, with a labor shortage of about 200,000 to 400,000 construction workers, according to the National Association of Home Builders, along with challenges around land availability and material costs, new construction and home renovations remain a difficult path for first-time homebuyers. Despite these challenges, younger homebuyers’ growing interest in building reflects their determination to find solutions in a competitive market.
Other Top Considerations
- Family is a Top Priority: Three in ten respondents (29%) said being close to family is one of their top three priorities when purchasing a home.
- Homeownership as a Wealth Builder: The majority of first-time homebuyers (88%) view buying a home as a smart long-term investment. Among generations, nearly half (46%) of Gen Z respondents are eager to use homeownership as their starting point for building wealth, highlighting the shift toward homeownership as a key financial strategy.
- Millennials Plan Ahead: Half of Millennials have factored in homebuying costs such as utilities, property taxes, maintenance and insurance, demonstrating thorough research and financial preparedness.
- Twenty Percent is in the Past: As a down payment can be one of the biggest obstacles to purchasing a home, 43% of LMI respondents believe that a 10% down payment is necessary, as opposed to traditional expectations of 20%.
