Gen Z, millennial homeowners struggle with mortgage payments

With mortgage rates sitting well above 6% for much of the last three years, nearly half of younger homeowners have struggled to make mortgage payments, an industry report finds.

Half of Gen Z homeowners and 44% of millennial homeowners were at risk of missing at least one mortgage payment over the last two years, according to the 2026 ServiceLink State of Homebuying Report, which surveyed homeowners and loan officers. Additionally, 14% of Gen Z respondents and 15% of millennials said they were at risk of missing a payment between six and 10 times during that period.

A separate report from LendingTree echoed this trend. While the average monthly payment on a new mortgage fell 2.4% last year, Gen Z borrowers spent an average of 24.5% of their monthly income on mortgage payments, compared with 20.3% for millennials and 18.2% for Gen Xers. 

About one-third of new Gen Z borrowers also spent 30% or more of their income on principal and interest payments, more than the 21.7% of millennials and 20.1% of Gen Xers who did the same, LendingTree reported.

"Tying up that much of your income in housing payments can make things really challenging," said Matt Schulz, LendingTree chief consumer finance analyst, in a press release Monday. "That's money that can't go toward other needs, like child care, or toward longer-term financial goals, like building an emergency fund, investing for retirement or saving for college."

More than 70% of respondents to ServiceLink's survey said they went over budget when purchasing a home in the last two years. Of that, 22% went $50,000 to $79,999 above their budget and 10% spent $80,000 or more than their budget, the report showed.

Almost 30% of respondents put down more of a down payment, took on more of a mortgage and were forced to take on a higher interest rate than they wanted as well.

"Between the paperwork, negotiations, securing a good rate and figuring out what the price of homeownership will actually cost them, today's homebuyers are telling us that they are overwhelmed," said Dave Steinmetz, president, origination services at ServiceLink, in a press release Tuesday. "Many are being forced to compromise, stretching beyond their budgets yet still not getting everything they want in a home."

This burden also weighed on loan officers, as 69% said borrowers taking on more of a mortgage than they can afford was their primary concern in the market. Nearly 40% also said home affordability, specifically qualifying borrowers for a loan, kept them up at night, the report found.

"[Homebuyers] are craving ease, value, transparency and long-term reliability," Steinmetz said. "Recognizing these needs can help lenders make meaningful shifts to streamline their processes to get them a competitive edge, meeting today's buyers where they are."