Flexible Home Buyers Are Having Most Success in 2025: Report

Purchasing your own home, perhaps the largest part of “the American Dream,” has become an unwieldy endeavor for many.

The last few decades gradually pushed back the goal posts of home buying through inequitable price growth rates compared to household income (and that’s before including the overall cost-of-living disparity). At the onset of 1984, the median home price-to-income ratio was 1.3x. That jumped to 5.2x by the end of 2023, based on Census Bureau and Department of Housing and Urban Development data.

But even in this landscape, people are still buying homes, albeit at a slower pace. As house hunters grapple with these dynamics, successful buyers have adapted to the environment by adopting new strategies, according to The Mortgage Reports’ Summer 2025 First-Time Home Buyer Survey.

“My first-time buyers in 2025 have been cautiously optimistic. Affordability is still a significant hurdle. With high home prices and elevated mortgage rates, many are exploring creative strategies to get a foot in the door,” said Craig Berry, loan originator and mortgage expert at The Mortgage Reports. “I’m seeing more buyers explore co-buying, fixer-uppers, and local down payment assistance programs to make it work.”

Making compromises

Home buying conditions continue to improve in 2025 as inventory rebounds. For-sale properties grew annually for the 21st straight month in July, with active listings spiking 24.8% to 1.1 million, according to Realtor.com.

The increased supply slowed average times on market to 58 days (up from 53 in May and 51 in July 2024), and raised the share of price reductions to 20.6% (20.7%, 19.5%).
Despite the pendulum swinging back towards buyers, many of the new homeowners surveyed reported making a tradeoff in their purchase.

A 43.1% share settled for a different area than where they originally wanted to buy. Meanwhile, 23.5% bought a fixer-upper, 21.6% relocated to somewhere more affordable, 15.7% opted for a longer commute, and 5.9% delayed a major life event such as a wedding or having a kid.

Having too few properties in their price range topped the list of home search challenges, with 62.8% reporting that as a difficulty. Behind lack of affordable options, borrowers didn’t find enough move-in ready homes (33.3%) and faced high competition (23.5%).

But buyers showed resiliency and adjusted their strategies accordingly.

A 43.1% share expanded their search to include different neighborhoods while 42.2% considered smaller and older homes, or compromised on features like yard size or total bedrooms. Further, 29.4% had the ability to raise their budget, while 13.7% made no adjustments.

Overall, a lack of return on investment inspired the majority of 2025 first-time home buyers. A 58.2% share said rent burnout drove their property search while 10.6% desired to build equity tethered to homeownership. Additionally, a growing family activated 18.6% of searches, 11.3% pointed to life changes like divorce or retirement, and 1.5% started looking after a job promotion.

“If you’re a first-time buyer, here are two things to focus on: Local affordability options, like down payment assistance, and outside-the-box strategies like house hacking, but do this with caution,” Berry said. “Realistic budgeting and proper mortgage planning are key. Homeownership is still doable in 2025. It just takes a little more strategy in today’s market.”

A shifting market

Home sellers have enjoyed the marketplace advantage over at least the last few years, but the tides are turning.

This shift helped buyer affordability, as 73% negotiated seller concessions and 43% managed a rate buydown. Though financial deterrents block many renters from thinking they can pursue homeownership, it’s possible to buy below listing price or reduce your monthly mortgage payment.

Demographically, 62.8% of 2025 home buyers surveyed identified themselves as female, compared to 33.3% for men. The remaining 4% split evenly between non-binary and those who didn’t disclose their gender. Millennials occupied the majority of recent first-time buyers at 56.9%, then came Gen Xers at 23.5%, Gen Z at 17.7% and Baby Boomers at about 2%.

What 2025 first-time home buyers showed us

Purchasing a home — especially your first — can feel like a monstrous, daunting venture.

Fittingly, 35.3% of respondents chose monthly mortgage payments as their top concern with buying a house. Just behind that, 33.3% said rising interest rates, then came saving for the down payment at 17.7% and qualifying for the loan at 13.7%.

It takes a little bit of legwork, but comparing interest rates from multiple lenders is one of the easiest ways to shave monthly costs. Getting a pair of mortgage rate quotes can save you as much as $600 annually, while at least four quotes can save upwards of $1,200, according to Freddie Mac.

Perhaps due to unfamiliarity or ineligibility, just 27.5% of recent first-time home buyers leveraged down payment assistance programs (compared to 65.3% of renters planning to use them). Meanwhile, 78.4% funded their down payment with personal savings, 17.7% used a family gift, 11.8% took on a second job, and 9.8% cashed out their 401(k) or inheritance.
People don’t always know what they don’t know, so working with a lending professional could help you fill any knowledge gaps, provide you expert insight, and bring light to any potential financial levers to pull.

The bottom line

Navigating a less-than-ideal housing market to make one of the biggest decisions of your life can feel intimidating.

Watching mortgage rates balloon from the historical lows of 2020 and 2021 likely pushed many hopeful buyers to the sidelines. But interest rates are famously unpredictable and moved in a very narrow band over the last year. Those who put off buying only to wait for lower rates missed out on building equity.

As first-time home buyers grapple with affordability issues, The Mortgage Reports’ Summer 2025 First-Time Home Buyer Survey showed flexibility to be the common thread setting them up for success.
If you’re ready to start your journey to homeownership, reach out to a local mortgage lender today.

For a look at the complete survey results, click here.