Lower down payments and government-backed loans help young buyers claim bigger market share
First-time homebuyers are driving a larger share of mortgage activity than ever, with new data showing they made up 58% of agency purchase lending in the first quarter of 2025 — the highest share on record.
The rise is happening as higher mortgage rates continue to deter repeat buyers, leaving room for younger buyers, especially Gen Z, to take a bigger share, according to Intercontinental Exchange’s (ICE) latest Mortgage Monitor report.
“While first-time homebuyers continue to face affordability headwinds, they don’t have the same disincentive to transact as many repeat buyers, who remain locked in the golden handcuffs of relatively low monthly payments on their existing homes,” said Andy Walden, head of mortgage and housing market research at ICE. “Younger homebuyers are picking up market share with lenders this spring.”
Walden also noted that buyers aged 35 and under accounted for over half of all financed home purchases by first-time buyers in Q1.
While repeat-buyer activity has dropped sharply, down 31% compared to pre-pandemic years, first-time buyer volume has declined just 19%. Purchase lending overall accounted for 82% of agency lending in 2023 and nearly three-quarters so far in 2025.
However, the Mortgage Bankers Association (MBA) noted that despite the spring buying season, purchase applications are still facing headwinds. Conventional and VA applications fell by 6% and 4%, respectively, while FHA purchase applications saw only a slight decline.
“Overall purchase applications continue to run ahead of last year’s pace,” said MBA deputy chief economist Joel Kan, pointing to slowly increasing housing inventory and ongoing demand from first-time buyers.
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Affordability remains a key issue. ICE origination data showed that in March, the average down payment for first-time buyers was $49,000, far below the $134,000 average put down by repeat buyers.
First-time buyers using conventional conforming loans typically provided $77,000 in down payments, while those using FHA loans put down significantly less, averaging $16,000. VA borrowers among first-time buyers contributed even lower average down payments, at just under $10,000.
Looking at loan performance, ICE eMBS data shows that loans to first-time homebuyers tend to prepay more slowly compared to those held by repeat buyers. However, first-time buyers also show a higher tendency toward default, a trend that can vary depending on the loan vintage, borrower cohort, and investor category.
“While first-time homebuyers continue to face affordability headwinds, they don’t have the same disincentive to transact as many repeat buyers, who remain locked in the golden handcuffs of relatively low monthly payments on their existing homes,” Walden said.
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