Exclusive: Nearly 60% Of Black Millennials Have $10,000 Of Non-Mortgage Debt, Many Fear They Won’t Ever Qualify For A Home Loan

Here are some alarming statistics: Roughly 60% of Black millennials have $10,000 or more in non-mortgage debt. And many of them have debt as high as $20,000 to about $50,000. And given the debt load at those levels, many are very concerned they will not be able to qualify for a home loan ever.

Those millennials were among respondents in a new report that shows overall, 92% of millennial homebuyers have some sort of debt, with 71% of them with over $10,000 of debt.

The stunning figures come from the Millennial Home Buyer Report: 2022 Edition, an online survey paid for by Real Estate Witch with reporting by BLACK ENTERPRISE. The findings also show millennials are willing to take significant steps to achieve homeownership.

They include “make rash decisions to afford a home in a competitive market, including buying a home sight unseen (90%), purchasing a fixer-upper that needs major repairs (82%), and offering over asking price (80%).”

Those discoveries come as the median home sales price was $346,900 in 2021, up nearly 17% from 2020. It was the best on record dating back to 1999, based on the National Association of Realtors. The trade group reported home sales had the strongest year since 2006, with 6.12 million homes sold, up 8.5% from 2005.

Jaime Seale, the report’s writer, says with so much debt, 1 in 3 of all millennial respondents worry they won’t be able to secure a loan. She added it might be a particular concern for Black Americans, who are 2.5 times more likely to be rejected for mortgage loans.

Seale explained when applying for a home loan, lenders look at applicants’ debt-to-income ratio (DTI). That’s how much of their gross monthly income they spend on the total amount of their debts. She says most lenders prefer borrowers with a DTI of 36%. If millennials’ debt prevents them from securing a loan, she expressed there are several ways they can manage or erase their debt and lower their DTI:

Decide which debts to pay off first. Start with the loan that has the highest interest rate to reduce overall debt and total amount of interest. Or start with the smallest balance. Once that’s paid off, take that payment and apply it to the next smallest debt.

If possible, pay bills on time each month to get out of debt faster and save on interest.

Pay bills on time each month to avoid late fees and increased interest.

Create an emergency fund. When unexpected expenses arise, use money from that account instead of charging it to a credit card and going into debt.

Seale noted debt is also a major hurdle to saving for a down payment — one of the three most significant barriers to homeownership among millennials. She says the good news is Black millennials have more savings in 2022, with over 75% reporting $10,000 or more. That’s up from 55% in 2021.

She added on another positive note, “Black millennial homebuyers have more positive emotions and fewer negative emotions about buying a home than the overall respondent pool. In particular, they’re 14% more likely to be proud of it.”