The overlooked homebuyer segment that could drive your growth strategy

Mortgage professionals are no strangers to the term first-time homebuyer. Typically defined as anyone who hasn’t owned a principal residence in the last three years, it’s a familiar phrase embedded in underwriting guidelines, down payment assistance programs, and marketing materials. But another group is quietly redefining the homeownership landscape, and it deserves far more attention.

First-generation homebuyers are individuals whose parents or guardians have never owned a home. These borrowers aren’t just buying their first house; they’re attempting to build generational wealth with little inherited knowledge, no family experience to lean on, and often, limited financial support. They also represent one of the largest pools of untapped demand in the housing market, especially in rapidly diversifying metropolitan areas where population growth has not been matched by rising homeownership. 

Why this segment matters to lenders

Many prospective buyers from communities of color are also first-generation homebuyers. The data makes this clear: the Urban Institute projects that by 2040, 70% of new homeowners will be people of color. Yet today, just 43.3% of Black households, 51.1% of Hispanic households, and 61.7% of Asian households own their homes. These gaps point to a large population of would-be buyers entering homeownership not only for the first time, but for the first time in their family’s history.

Engaging with first-generation buyers aligns closely with Community Reinvestment Act (CRA) goals and fair lending priorities. Lenders that proactively invest in underserved communities don’t just improve their compliance profile; they build lasting trust.

Perhaps more compelling, though, is the business value in building long-term relationships with first-generation buyers. When someone becomes the first in their family to buy a home, it’s a milestone for them and their broader network. They’re more likely to refer friends and family members, return for future mortgage needs, and remember which lender helped make it possible.

What It takes to serve first-generation buyers 

Serving first-generation homebuyers effectively requires a different approach than what lenders might use with more experienced or generational borrowers. It begins with education. Lenders must be prepared to explain the mortgage process in clear, accessible language. Educational content should be free of industry jargon, delivered in multiple formats, and repeated at different stages of a buyer’s journey. Hosting homebuyer seminars, webinars, or resource hubs tailored to first-generation buyers can help demystify the process and build confidence.

Outreach should also be rooted in trust. That means building partnerships with community-based organizations that already serve these populations. Faith-based groups, cultural centers, and nonprofit housing counselors are often the most trusted voices in underserved communities. Collaborating with them extends a lender’s reach in authentic, credible ways.

Internally, lenders must equip their teams to serve these borrowers effectively. Loan officers need training beyond products and pricing; they need to understand the specific hurdles first-generation buyers face and how to guide them through the process with empathy and clarity. The goal isn’t to “close a loan” but to build a relationship rooted in respect and shared success.

Marketing also plays a critical role. Materials should reflect the communities lenders want to serve, not only in language but also in imagery and tone. Representation matters, as does accessibility, especially when borrowers may be engaging with the mortgage process for the very first time.

Where to find first-generation buyers

National data on first-generation buyers are still emerging, but several studies offer clear directional clues on where they are and how to reach them. 

The Urban Institute estimates roughly 2.5 million renter households nationwide could qualify as first-generation homebuyers, with the greatest absolute numbers in high-population, high-diversity states such as California, Texas, Florida, and New York. At the metro level, regions that post the widest racial homeownership gaps often overlap with likely concentrations of first-generation buyers.

In Minneapolis–St. Paul, for example, only 32% of Black and 48% of Hispanic households own their homes, versus 76% of white households—one of the most significant disparities in the country. These gaps don’t just reflect historical inequities—they underscore where lenders can make a measurable difference. With many first-generation homebuyers in multicultural communities, the overlap presents a powerful opportunity for institutions committed to equitable access: investing in outreach, education, and sustained support where the gaps are widest.

Approaching markets with tailored strategies can lead to stronger borrower engagement and improved loan pull-through. In one public case study, a national lender used predictive analytics to align outreach with borrower-level needs, achieving a 78% engagement rate and an elevenfold increase in pull-through-to-close ratios. While this wasn’t an iEmergent initiative, it highlights a broader truth: results improve when outreach is rooted in data and community-level insights.

The path Fforward

At first glance, the distinction between “first-time” and “first-generation” homebuyers may seem minor. But in practice, it’s a lens that changes everything, from how lenders design products to how they engage with communities.

By recognizing the unique barriers first-generation buyers face and developing strategies rooted in data, empathy, and education, lenders can unlock a new avenue for growth. More importantly, they can help close one of the most persistent gaps in American housing: the ability to own a home and build wealth across generations.

In a market where every basis point counts, and every borrower relationship matters, serving first-generation buyers isn’t just the right thing to do—it’s a forward-thinking, future-focused strategy for lenders who want to lead.

Laird Nossuli is the CEO of iEmergent.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: zeb@hwmedia.com.