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Bridging the Gap: Supporting First-Time Homebuyers in 2025

Jan 24

3 min read

As we begin 2025, it is imperative to examine how the evolving mortgage market is affecting first-time homebuyers. Historically, this group played a pivotal role in the housing sector and the broader economy. However, first-time buyers are facing unprecedented challenges. Their market share has plummeted to an all-time low of 24%, down from 32% in 2023. Additionally, the average age of first-time homebuyers has risen significantly, from 35 in 2023 to 38 in 2024. These shifts highlight the ongoing affordable housing crisis, compounded by rising home prices, limited inventory, and economic uncertainty.


Despite these challenges, first-time homebuyers remain essential to the health of the mortgage market and the American economy. Supporting this demographic not only allows individuals to enter the middle class but also fosters economic stability and strengthens communities. To bridge the gap and make homeownership more accessible, targeted programs and innovative solutions are more critical than ever.


Programs That Make a Difference


Government programs play a key role in supporting first-time buyers by addressing financial barriers and fostering affordability:

  • Virginia’s Homeownership Down Payment Assistance Program provides flexible gap financing for first-time homebuyers earning at or below 80% of the area median income (AMI).

  • VA Loans, available to U.S. military members, veterans, and surviving spouses, offer favorable terms and require no down payment.

  • USDA Loans are designed for economically disadvantaged buyers in rural areas, providing opportunities for homeownership in underserved regions.


Private company initiatives have a role to play in closing the affordability gap. For example, a handful of mortgage companies have developed grant programs tailored to help first-time buyers who may not qualify for government assistance but still require financial support to make homeownership possible. These programs aim to address specific barriers, such as the inability to save for a down payment or cover closing costs, which can prevent otherwise qualified buyers from purchasing a home.


Consider a young couple who dreamed of purchasing their first home but found themselves unable to cover the upfront costs. With access to a lender-funded grant, they were able to turn their dream into reality, demonstrating how targeted support can have a transformative impact on families and communities. As one loan officer described, “Providing this assistance allowed my borrowers to leverage their resources and secure a home they could afford. Without this support, they would have remained renters.”


At Atlantic Bay Mortgage Group, the Homebound program was launched in November 2024 to create pathways to homeownership for individuals and families who face barriers and highlight the broader economic benefits of enabling more people to build equity and invest in their futures. 


This lender-funded grant program provides qualified first-time buyers with a non-repayable grant that can be used toward a down payment, closing costs or prepaid expenses. The program is designed for individuals who fall in the gap between qualifying for government-funded down payment assistance (DPA) and securing a loan without additional support.


Since its inception, Atlantic Bay’s Homebound program has already made a tangible impact, providing loans to families across its footprint. The goal of Homebound is clear: to create more affordable homeownership opportunities and help individuals achieve their dream of owning a home.


The Path Forward


The mortgage industry must continue to innovate and advocate for policies that expand access to affordable homeownership. This requires collaboration between lenders, policymakers and community organizations to address persistent challenges such as rising housing costs and limited inventory.


Lender-funded down payment assistance programs are just one example of how the private sector can complement government initiatives and support first-time buyers. These programs provide a critical bridge for individuals who are ready to buy a home but lack the upfront funds to do so. By making homeownership more attainable, we can help strengthen the middle class and promote long-term economic stability.


The challenges facing first-time homebuyers are significant, but they are not insurmountable. By prioritizing solutions that address affordability and accessibility, we can ensure that the dream of homeownership remains within reach for future generations. Supporting first-time buyers is not just about helping individuals—it’s about fostering stronger communities and a more resilient economy. It’s time for all stakeholders to step up and bridge the gap for those striving to achieve the American Dream.

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