How Gen Z & Millennials Are Affording Down Payments: Survey Data & Strategies

For many young Americans, buying a first home is a monumental financial challenge. A recent survey reveals that nearly one-quarter (23.8%) of Gen Z and millennial homebuyers relied on family financial assistance—either a cash gift or an inheritance—to fund their down payment. While saving directly from paychecks remains the most common method, this data highlights the critical role of family support and alternative strategies in overcoming the high barrier to homeownership in today's market.

How Are Young Buyers Saving for Down Payments?

According to a Redfin-commissioned survey conducted in May 2025, recent homebuyers from younger generations utilized a diverse mix of methods to accumulate the necessary funds for a down payment—the initial, upfront payment made when purchasing a home with a mortgage.

The following table breaks down the primary sources of down payment funds among Gen Z and millennial buyers:

Source: Redfin-commissioned survey by Ipsos, May 2025.

This data underscores that while personal savings are foundational, a significant portion of buyers are leveraging investments, making lifestyle sacrifices, and receiving direct financial help from their families to achieve their goal.

Why Is the Down Payment Such a Significant Hurdle?

The challenge stems from record-high housing costs. As of 2024, the typical down payment in the U.S. was approximately $63,000, representing 16.3% of the median home-purchase price. With home prices and mortgage payments near all-time highs, saving a five-figure sum is increasingly difficult, even for employed individuals.

This affordability crisis is a primary reason many young renters are delaying homeownership. The same survey found that 24.7% of Gen Z and millennial renters aren't buying because they can't afford a home in their desired area. Other top reasons include being financially unprepared for the surprise costs of homeownership (23.4%) and high mortgage rates (19.9%). For 18.2%, the inability to save for a down payment is the specific barrier.

What Practical Steps Can Potential Buyers Take?

Based on our experience assessment, a multi-faceted approach is often necessary. Relying solely on paycheck savings may not be sufficient for everyone.

• Explore All Savings Avenues: If you have investments, consider how they might contribute to your goal. However, be cautious about early withdrawals from retirement accounts, which can incur penalties and tax implications.
• Consider Lifestyle Adjustments: As the data shows, 18% of young buyers lived with family or friends to reduce living expenses and accelerate their savings. This strategy can dramatically increase your monthly savings rate.
• Understand Family Gift Rules: If family assistance is a possibility, it's important to know that mortgage lenders typically require a gift letter—a formal document from the donor stating the funds are a gift and not a loan—to use the money for a down payment.

For those who have the option, receiving family help to build equity in a buyer's market can be a strategic move. As one industry expert noted, starting to build equity can be advantageous when sellers are more willing to offer concessions.

Ultimately, the path to homeownership is highly personal. Understanding the common strategies used by successful buyers can help you evaluate your own financial situation and create a realistic plan. The key is to start with a clear assessment of your finances and explore every legitimate avenue to reach your down payment target.