It’s hard for first-time homebuyers to afford a home today. But for first-generation homebuyers—those without the support of intergenerational wealth built through homeownership—it’s much more difficult.

Young adults whose parents did not have access to homeownership are less likely to become homeowners themselves. A third of first-time homebuyers receive assistance from family or friends for a down payment, but this assistance is less likely when a borrower’s parents don’t own. The median renting family has only $10,400 in wealth, while the median homeowning family has 38 times that ($396,200). For households of color, who are less likely to have homeowning parents, assistance from family or friends is less common.

There is good news: catalyzed by a national program that was included in the Biden administration’s Build Back Better proposal, state and local leaders are creating new first-generation down payment assistance (DPA) programs that could help households without intergenerational wealth. In 2023 alone, Colorado, Maine (PDF), Minnesota, New Jersey, and Vermont allocated funding for first-generation DPA programs, joining Oregon (PDF), Rhode Island, and Masschussetts, who introduced the first such programs. In addition, six localities—5 counties in Minnesota (PDF); 16 counties in North Carolina; Ramsey County, Minnesota; Long Beach, California; Edina, Minnesota; and St. Louis Park, Minnesota—have implemented first-generation programs in the past two years.

As these programs spread, it is crucial that providers coalesce around a standard definition of “first-generation homebuyer,” which could help these households overcome the most significant obstacle to homeownership.

Without a clear or consistent definition, different first-generation DPA programs could leave out some buyers most in need of assistance. Targeting programs to first-time homebuyers whose parents are not recent homeowners, even if they have owned at some point in their lives, will maximize the likelihood that these new programs best serve those who need it and minimize the administrative burden on lenders and borrowers alike.

Read the full article about first-generation homebuyers by Aniket Mehrotra, Jung Hyun Choi, and Janneke Ratcliffe at Urban Institute.