Rooted
Use community lending to turn “mortgage ready” renters into homeowners
Leverage targeted strategies to engage ready borrowers in your community.
After hitting a low of 63.4% in 2016, the U.S. homeownership rate has bounced back, landing at 65.6% in 2024.1 That’s good news, on the surface. But dig a little deeper and a troubling trend emerges: Younger Americans, especially Gens Y and Z, are falling behind.
These groups are on track to reach homeownership levels well below those of baby boomers, Gen X and the Silent Generation.2 And while the headlines focus on housing prices, the real story for mortgage professionals is opportunity.
There are millions of people who can buy a home but haven’t yet. The question is: Are you reaching them?
The “mortgage ready” opportunity
Zillow highlighted a huge, often-overlooked market segment: “mortgage ready” renters.3 These are families who aren’t homeowners yet but have the credit profile, income level and debt-to-income ratio to qualify for a mortgage under today’s standards.
By Zillow’s estimates, there are 7.9 million “mortgage ready” families nationwide.
Think about that. These are people who could buy a home today but, for one reason or another, haven’t made the leap. That’s a massive, untapped opportunity for community lenders committed to expanding access to homeownership.
So how can you connect with these renters and help them make the move?
Step 1: Understand who's "mortgage ready" in your market
Before launching a campaign or adjusting your product lineup, start by understanding your local market. How many of those millions of potential buyers are in your lending area? What obstacles are holding them back?
Review your Home Mortgage Disclosure Act (HMDA) data, talk with local nonprofits and explore whether low application volumes point to communities full of ready but reluctant buyers you can reach.
Step 2: Redefine what homebuyer education means
Let’s be honest: Sometimes lenders view homebuyer education as a compliance checkbox, as well as something you do to satisfy a loan program requirement.
But if done right, education can be one of your most powerful community outreach tools.
Go beyond “how to get a mortgage” and broaden your message:
- Show renters the emotional and financial benefits of owning versus renting
- Break down common myths (no, you don’t need 20% down or perfect credit)
- Start the conversation before someone fills out a loan application, especially in trusted community settings
The earlier and more broadly you educate, the more confident (and interested) potential buyers will become.
Step 3: Build strategic community partnerships
You don’t have to do it alone. Trusted voices in the community (nonprofits, employers, schools, religious organizations) can help you reach “mortgage ready” individuals in ways you may not be able to on your own. Maximize your community impact:
- Collaborate with housing counselors who can guide renters through credit preparation, saving for a down payment, and navigating the homebuying process
- Team up with local employers to bring mortgage education to the workplace
- Partner with faith-based organizations to offer workshops
Employer-assisted housing programs are also gaining traction and can be a great fit for community-minded lenders.
Step 4: Look to scalable models like CONVERGENCE
If you’re looking for a proven framework, take a cue from the Mortgage Bankers Association’s CONVERGENCE initiative. This multi-year, place-based collaboration has already launched in cities like Memphis, TN; Columbus, OH; and Philadelphia, PA.
What makes CONVERGENCE effective? It targets 4 key obstacles to homeownership:
- The knowledge hurdle – Misconceptions about credit, down payment amounts and lending requirements
- The trust hurdle – Consumers who are unsure if lenders have their best interests at heart
- The market hurdle – Not enough affordable, quality homes in the right places
- The resource hurdle – Lack of awareness (by both borrowers and lenders) about tools like down payment assistance and homebuyer education resources
CONVERGENCE brings together lenders, nonprofits, government agencies, real estate professionals and other players to address these gaps in a coordinated way, and it’s a model worth watching (or replicating) in your own market.
The bottom line for lenders
If you're in community lending, this is your moment. Millions of potential borrowers are sitting just outside the system – not because they don’t qualify, but because they haven’t been shown a clear, trustworthy path to homeownership.
With the right education, partnerships and outreach, you can be the bridge that connects “mortgage ready” renters to sustainable homeownership and build both wealth and trust in the process.
2 MGIC Product & Marketing Group estimates based on the following research:
- 2019-23 American Community Survey 5-year estimates, U.S. Census Bureau, released Dec. 12, 2024
- Zillow Consumer Housing Trends Report 2024, released Oct. 14, 2024
- Snapshot of Race and Homebuying in America, National Association of Realtors (NAR), released Feb. 19, 2024
- The Future of Headship and Homeownership, Laurie Goodman and Jun Zhu, Urban Institute, released Jan. 21, 2021
Need a partner to help refine your approach?
Our community lending specialists are here to collaborate with you, as an exclusive benefit of working with MGIC, and one more way we are leading the industry. Reach out to your MGIC account representative to get connected.
You might also like
-
Rooted: Growing homeownership
Learn how MGIC’s comprehensive community lending solutions framework can help you meet your goals.
-
Rooted: Get to work!
Amplify your community lending strategy with these resources, products and solutions.
-