Millennials have a right to be skeptical about the housing market. They lived through the aftermath of the 2008 recession. They also watched its sluggish recovery, only to be sidelined by rising interest rates, a massive housing shortage, cash buyers, and bidding wars.

These are legitimate reasons to be cautious, but we would also like to put a twist on this tale and remind millennials that the story is far from over.

While it’s true that the market has changed, homeownership is still within reach. You just have to know how to navigate the landscape. Here are a few tips to get you started.

Our Industry Learned From It’s Mistakes

In 2008 alone, over 3 million Americans filed for home foreclosure. Millennials haven’t forgotten that. Like Millennials, other buyers, lenders, and realtors are equally wary of history repeating itself. But we don’t see that happening anytime soon. Here’s why.

Before 2008, there were industries saying: “If you can fog a mirror, you can get a home loan.” While not entirely true, our industry did have lax lending standards, used aggressive marketing, and approved loans to borrowers with poor credit histories and inadequate income documentation.

That’s changed.

So, while buyers are up against more rigorous lending standards, we see this as a step in the right direction. This should take some of the fear out of buying because you know you will only be approved for a loan you can reasonably afford every month.

Credit Scores Matter More

The housing market crashed in 2008 for many reasons—a big one was that lenders approved loan applications from borrowers with low credit scores and could not demonstrate a history of timely repayment. That’s changed.

Today, the average borrower has a credit score of 711. If you have a credit score in the low 600s, don’t despair. There are ways to give it a boost.

Begin by paying any bills that have gone to collections, and start paying all of your bills on time. Additionally, avoid taking out additional lines of credit and check your credit report for inaccuracies. If you stick to this plan you can expect your credit score to climb in six months.

Buy Smaller

Oversized floor plans, towering ceilings, and excessive square footage characterized the mini-mansion era (think late 90s and early 2000s). Like them or not, these homes consumed excessive resources, rarely made good use of space, and, depending on your standards, were generally too big for the families who purchased them.

Millennials are increasingly drawn to smaller homes—not only because they are more affordable but because they are more energy efficient. They also cost less to furnish.

This is a smart move, especially in a competitive landscape with higher interest rates. Our advice? Start small and buy what you can reasonably afford.

Conventions No Longer Apply

Previous generations typically waited until marriage to purchase a home. That’s changing with convention, and it may work in your favor.

These days, we help many friends and partners jointly purchase a home and have the title put in one or both of their names.

This arrangement can be beneficial, especially if one party has a lower credit score, as it allows for flexible financing options. Or, if one of you has a lower credit score, the other can apply for an individual loan and include the partner on the title. However, it's important to note that the loan will be based on one income, so you will likely be approved for a lower loan amount.

While this approach offers flexibility, proceeding cautiously and ensuring a trusting relationship before committing to joint homeownership is critical. Clear communication, financial transparency, and a mutual understanding of responsibilities are crucial to navigating this arrangement successfully.

JustChoice Lending: Your Mortgage Solution

At JustChoice Lending (JCL), we are a socially responsible mortgage lender providing competitive rates and personalized service. We assist clients of all income levels, including those from lower-income backgrounds, achieve their homeownership goals by improving their credit scores. Contact us today to speak with one of our mortgage experts to get started!