The next generation of homebuyers is ‘overloaded’ and confused

A new report from FirstHome IQ found that while younger generations express confidence in managing their finances, most still lack core financial literacy skills.

The 2025 NextGen Financial Literacy Report, released on Monday, is based on a survey done in partnership between FirstHome IQ and National MI. It includes 500 people between the ages 18 and 44, and it found that major gaps in knowledge exist for Generation Z and millennials around credit, investing and long-term planning.

Although more than two-thirds of participants said they felt “confident” making financial decisions, fewer than half could correctly answer basic questions about interest rates, credit scores and retirement savings.

Nearly half of surveyed homebuyers believe they need 20% down to buy a home, while only 8% correctly identified the minimum down payment for a conventional loan. Mortgage insurance is also misunderstood as only 35% recognize its main benefit (enabling smaller down payments), and just 57% know it can be removed during the loan term.

Of the respondents, 52% said they feel “overloaded” by financial information, and 51% reported having delayed major financial decisions due to their complexity. Roughly 40% of Gen Z trusts influencers for homebuying advice, and 71% use TikTok for research. Overall, 40% turn to social media for homebuyer education.

More than half (61%) of respondents said they would use AI tools like ChatGPT for homebuying information, which is up from 35% in January 2025.

Demographics influence financial literacy and comfort. Women reported significantly lower confidence than men (38% vs. 47%), yet performed equally well on literacy assessments.

The survey also recognized a generational knowledge gap, with quiz scores rising with age as Gen Z respondents averaged 67%, younger millennials 71% and older millennials 74%.

Buyer archetypes, representing 88% of all respondents, emerged as a result of the study.

“Stay secure” buyers, defined as those who view money as primarily for security and stability, represented 53% of the cohort. “Enjoy life” buyers, who view money for enabling experiences and are more vulnerable to homebuying myths, represented 35%.

To combat buyer confusion, the survey recommends “myth-busting” campaigns for buyers to educate them on down payment options and mortgage insurance. Building trust, marketing on channels like TikTok and Instagram, and offering AI tools to support the homebuying process, were among the report’s recommendations.