Getting millennials to buy into homebuying on
a large scale demands a two-pronged strategy.
The issue of affordability is central, but mortgage
originators also should embrace a long-term commitment to educating millennials about the homebuying process and the value of homeownership.
Obviously, originators can do little about the U.S.
economy’s structural problems on a practical level.
They are well-positioned, however, to offer solutions
through first-time-homebuyer products like Fannie
Mae’s Home-Ready or Freddie Mac’s Home Possible
programs, or through their lender’s in-house programs tailored to this market. Downpayment
assistance programs offered by state and city
housing-finance agencies are another option for
The underwriting guidelines of these more flexible programs accept expanded debt-to-income
and/or loan-to-value ratios and feature lower
credit score requirements. They also accommodate
special circumstances, such as multigenerational
The obstacle of small downpayments can be
tackled by working with private mortgage insurers, which offer their own sets of flexible guidelines
directed at first-time buyers. Mortgage insurers
also can help with portfolio-lending programs
aimed at millennials, a generation that doesn’t necessarily check all the boxes on the average home-loan application.
The Federal Housing Administration, or FHA,
loan-guarantee program also is a popular option,
although its restrictive mortgage insurance
that lasts for the life of the loan may not make
financial sense for some homebuyers. Private mort-
gage insurance on a conventional loan is auto-
matically cancelled when the principal balance on
a borrower’s loan reaches 78 percent of the prop-
erty’s original value and borrowers may request
cancellation when the principal balance reaches
Although affordability is the key, many millennials remain unaware of the possibilities available
to them, which is why education also is necessary.
Publicizing the existence of real-life, affordable
solutions and making the homebuying process
easy need to be priorities for lenders, mortgage
companies and originators.
Reach out to millennials where they live: on the
internet. Any first-time homebuyer program adver-
tising should run in tandem with a robust social
media campaign that works across devices and
platforms. Those campaigns work best if they do
It also is important to bring millennials into your
community. For many millennials, a bank is the
place with the ATM outside. Change that viewpoint
by rebranding your institution as a one-stop com-
munity resource for first-time homebuyers. Partner
with a local café or coffee shop and invite young
people to attend free homebuying sessions. Here
are a few ideas:
n Educational seminars that take would-be
purchasers step by step through the process;
n Meet-and-greets with real-life homebuyers in
the community who share their experience with
affordable loan programs; and
n Presentations by local Realtors to highlight
different neighborhoods, types of homes and
their relative affordability.
A steady supply of first-time homebuyers is critical
for the long-term health of the housing market, so
the participation of millennials is essential. Converting millennials into homeowners benefits
everybody: borrowers, lenders, allied industries,
current homeowners trying to “move up” to bigger
homes or “downsize” for retirement, communities
and the overall economy.
With home prices going up, along with interest
rates, affordability will continue to be the watchword of this generation. Homeownership always
has been a challenge for first-timers, but by offering
affordable, responsible homeownership, originators can help millennials secure their future.
If affordability is the fulcrum, education is the
grease that turns the lever. An educated homebuyer
is more likely to understand the value of homeownership and, by actively reaching out to educate
these potential homebuyers, lenders and originators can help to assure their own futures. n
Jim Jumpe is senior vice president and chief marketing
officer at Arch Mortgage Insurance Co. He oversees a long-term strategy to steward the Arch MI brand; help drive
sales through effective customer communication, events,
advertising, and marketing collateral; and develop and
execute innovative marketing strategies. Reach him at