Personal debt – particularly credit card, student loan and medical – tremendously impacts the type and features of home someone can afford, their timeline for buying a home, their ability to afford an adequate down payment and, ultimately, whether or not they are approved for a mortgage, according to the report, the largest and most comprehensive survey of real estate consumers.
More than two thirds of renters have debt, and about a quarter of renters and home buyers said their debt caused them to be denied either a rental agreement or a mortgage at some point. That impact was most commonly reported by those with medical debt, which has a unique capacity to bust budgets. Nearly two-thirds of renters and 44% of homeowners with medical debt said they couldn't cover an unforeseen
Half of renters and 39% of buyers said student debt led them to delay buying a home. And once they do, it impacts how much they are able to put down, ultimately affecting their monthly budgets for decades. Two-thirds of buyers with any kind of debt put down less than 20% when they secure a mortgage, compared with 40% of buyers without debt. The share is even higher (76%) for buyers with student debt. Putting down less than 20%, while fairly common, not only increases monthly payments but also can lead to added expenses if a lender requires private mortgage insurance or other upfront fees to compensate for the added risk.
And for those burdened with debt, financial sacrifices are common – 73% of renters and 68% of buyers with debt said they made at least one financial sacrifice to afford their home, compared with half of renters and 39% of buyers without debt. The most commonly cited lifestyle changes were reducing spending on entertainment, picking up additional work, cutting back on vacation and decreasing spending on technology. Those in debt also are more likely to go over their homebuying budgets.
"When we focus on low unemployment and the strong economy, we often forget that in many ways the rising costs of life can erode most of those gains," said
Type of buyers' debt
Said debt was the reason for a mortgage or rental deniali
None of these
Net: any debt
The 2019 Zillow Group Report on Consumer Housing Trends is the 4th annual largest-ever survey of
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i Among those who said they have each type of debt.