Rooted
Community lenders: Ask yourselves 4 questions to unlock homebuying opportunities
Strategically grow your community lending footprint by connecting more borrowers to sustainable homeownership.
For millennials (Generation Y) and Generation Z, the dream of owning a home is slipping further out of reach. If these generations continue their current trajectories, their homeownership rates will fall well below those of baby boomers, Generation X and the Silent Generation.
To put this into perspective: If Gens Y and Z could reach the same homeownership rate (70%) as Gen X, it would mean 4.3 million more homeowners. And hitting the rate (75%) achieved by earlier generations? That would double the impact by adding another 4.3 million households.1
That’s a whopping 8.6 million-home purchase opportunity and a critical challenge for lenders to embrace, especially those engaged in community lending and affordable homeownership strategies.
It goes beyond demand to accessibility
So why the generational differences? It's not that younger generations don’t want to own homes. Affordability issues, stagnant wages, limited inventory, student loan debt and other challenges have created roadblocks that didn’t exist for previous generations.
As a mortgage professional, you can’t control the entire housing ecosystem. But you can influence how prepared future borrowers are, and whether your products and services meet them where they are.
Before you can make an impact, start by asking yourself 4 strategic questions.
1. Are we helping renters see themselves as homeowners?
Many Americans are sitting on the sidelines not because they can’t afford to buy a home, but because they think they can’t. A lack of financial education and misinformation can keep qualified borrowers from even trying.
According to a Zillow analysis done in 2022, 7.9 million families renting were “mortgage ready,” meaning they had the requisite credit score, income and DTI ratio to qualify for a mortgage.2 But oftentimes, these people are not engaging with the mortgage finance system.
How can you reach this group of “mortgage ready” renters? Ensure your digital platforms, loan officers and community partnerships help renters to clearly understand the benefits of homeownership and dispel prevailing myths about mortgage readiness and housing affordability.
2. Do we have a support system in place for would-be borrowers who aren’t mortgage ready yet?
Not everyone is ready to apply for a mortgage today, but that doesn’t mean they won’t be in the near future. Tools that help with credit repair, budgeting, savings plans, and pre-purchase counseling are essential to moving renters along the path to homeownership.
For community lenders, success means more than just closing loans. It also means investing in near-ready borrowers on their path to full readiness. Whether you do that through partnerships, technology or internal initiatives, look at what you’re doing to help near-ready borrowers become fully ready.
3. Are we helping to tackle external barriers that keep homeownership out of reach?
Even the most determined borrower can hit a wall when external conditions work against them. Lack of affordable homes, appraisal shortfalls, and limited access to down payment assistance are all barriers beyond the borrower’s control, but not beyond our collective influence.
In Milwaukee, for example, a public–private coalition is buying homes to rehab and sell to mortgage ready buyers, outbidding institutional cash buyers and keeping housing stock accessible.
You may not be able to start a fund like that, but you can support similar initiatives, advocate for smart policies, and find other ways to make a difference beyond the loan desk.
4. Do our products truly support sustainable, wealth-building homeownership?
Here’s the hard truth: Getting someone into a home isn’t beneficial if they can’t afford to stay there.
Focus on solutions that serve the needs of your local market, especially for creditworthy borrowers who might need tailored support to achieve sustainability.
Use data to inform your strategy. Look at HMDA data, denial trends and community feedback to identify what’s missing from your product mix, and make sure you’re not putting volume over viability.
Final thought: Create the opportunity
For mortgage professionals, especially those in community lending, the question isn’t whether to get involved, it’s how. Having an impact starts with clear questions, honest answers, targeted strategies, and the belief that smart lending doesn’t just move units; it builds wealth, strengthens neighborhoods and creates legacies.
1 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
Want to expand your community lending impact?
Start by answering the strategic questions above to better understand your market and borrowers. Then, explore our community lending resources to develop sustainable homeownership strategies that work.
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.
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