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If first-time home buyers start saving for their down payment today, in 10 years they still won’t have enough stashed away.

Stagnant wages and rising property prices don’t bode well for first-time buyers who don’t have equity or wealthy parents to help them out. It takes an average of 12.5 years to save up a 20% down payment — the usual requirement by banks — with the current personal savings rate of 5.6%, according to new research by real-estate firm RealtyTrac. It could take even more than that. RealtyTrac’s figure is based on current house prices — and doesn’t take into account possible further rises in home prices.

“It’s too hard to get a loan today and when first-time buyers believe that, they won’t even begin their search,” says Rob Chrane, president and chief executive of Down Payment Resource, a web-based software company in Atlanta that aims to help potential house buyers qualify for a mortgage. RealtyTrac analyzed affordability in 512 U.S. counties with a combined population of 235 million with median household incomes based on Census Bureau data. The median price of a home is around $259,000, which would require a 20% down payment of $51,800.

If the down payment for a conventional loan was lowered to 3% from the traditional 20% — as has been suggested by Melvin Watt, director of the Federal Housing Finance Agency — it would take less than two years. “To increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises [Fannie Mae and Freddie Mac] to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95% and 97%,” he told the Mortgage Bankers Association last month.

Also see: Jobs report hints at housing recovery

Millennials are the first to deal with this, says Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. It now takes the average worker until age 30 to earn the national median salary; young workers in 1980 reached that point in their careers at age 26, according to a 2013 Georgetown University study, “Failure to Launch: Structural Shift and the New Lost Generation. “What that all says is that you’ve got to be 42 to buy a house,” Carnevale says.

See also: 10 best college towns for renting and flipping

This is particularly true for young men, he says. As access to blue-collar occupations has declined over the past three decades, they’ve been left unable to find work or are increasingly likely to work in jobs that pay less. In 1980, young men earned 85% of the average wage in the labor market; today, they earn only 58%, Carnevale says. Of course, a lot has happened during that period — the dot-com crash, the housing crash, 9/11, and the wars in Iraq and Afghanistan. “On top of that, those who go to college have an average of $30,000 of college loans to repay,” he says.

The Federal Housing Administration allows buyers to get a mortgage with a down payment as low as 3.5%, with a 30-year fixed rate of 3.75%, although consumers could get better terms with a higher down payment, says Whitney Fite, managing director of Angel Oak Home Loans in Atlanta; they still need to meet debt-to-income ratio and cash reserve requirements. “The guidelines continue to expand and loosen to the extent that people don’t require as much of a down payment. But the process of applying for a loan is still onerous.”

However, for borrowers with student loans and car payments, monthly house payments are affordable in less than half of U.S. housing markets studied by RealtyTrac. For borrowers without the additional debt of student loans and car payments, monthly house payments are affordable in 92% of the 512 U.S. counties studied — even with just a 3% down payment. “A bigger obstacle to homeownership is the additional non-mortgage debt,” says Daren Blomquist, vice president at RealtyTrac.

This story was originally published on Nov. 5, 2014, on


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