Credit unions are familiar with the term first-time homebuyer (FTHB). 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—and for good reason. But there’s another group reshaping the future of homeownership, and they deserve more attention.
First-generation homebuyers are individuals whose parents or guardians have never owned a home. These members aren’t just purchasing their first home—they’re taking the first step toward building generational wealth, often without the benefit of inherited knowledge or financial guidance.
While these two groups often overlap, their challenges, histories, and needs are distinct. Understanding the difference isn’t just a matter of semantics; it’s a strategic necessity for credit unions, especially in an environment where sustainable mortgage growth depends on expanding into underserved markets and leading with equity.
Why This Segment Matters to Credit Unions
First-generation homebuyers represent one of the largest pools of untapped demand in the housing market, especially in rapidly diversifying metropolitan areas where homeownership growth has not kept pace with population growth.
Many prospective buyers from communities of color are also first-generation homebuyers. The Urban Institute projects that by 2041, 70% of new homeowners will be people of color, yet only 43.3% of Black households, 51.1% of Hispanic households, and 61.7% of Asian households currently own homes. These disparities highlight a substantial group of would-be buyers who are not only new up homeownership, they are breaking ground within their family lineage.
There’s a strong regulatory and reputational argument for engaging with first-generation buyers. It aligns closely with Community Reinvestment Act (CRA) goals and fair lending priorities. But by proactively investing in these underserved communities, credit unions do more than improve their compliance profile; they build lasting trust.
The practice also creates enduring business value. When a member becomes the first in their family to buy a home, it’s a powerful milestone—one they often share with their network. First-generation buyers are more likely to refer family and friends, return to the same credit union for future financial needs, and remember who helped them achieve a life-changing goal.
How to Serve First-Generation Buyers
To serve first-generation homebuyers effectively, credit unions must adapt a different approach from what might be used with more experienced members. It starts with education. Credit unions must be prepared to explain the mortgage process in straightforward, accessible terms—free of jargon, delivered across multiple channels, and repeated throughout a member’s journey in the homebuying process. Offering seminars, webinars, or resource hubs tailored to first-generation buyers can help demystify the process and build confidence.
Trust-based outreach is also essential. Partnering with local nonprofits, faith-based groups, schools, and cultural organizations—entities that already serve and understand these communities—can help credit unions extend their reach authentically and credibly.
Internally, credit union staff need the tools and training to meet these members where they are. This means more than just understanding products—it means understanding people. Loan officers and member service representatives must be able to recognize the specific challenges that come with being the first in a family to buy a home and to offer guidance grounded in empathy. Rather than closing a loan, the goal should be to build a relationship rooted in respect and shared success.
Marketing materials should also reflect the people and communities credit unions seek to serve. Representation across imagery, language, and tone sends a message of belonging, so does accessibility. For many first-generation buyers, that message can make the difference between hesitating and taking action on the mortgage process—unfamiliar territory.
Locating First-Generation Buyers
While national data on first-generation homebuyers is still emerging, current research offers clear signals on where they are and how to reach them.
The Urban Institute estimates that 2.5 million renter households across the U.S. could qualify as first-generation homebuyers. These individuals are most concentrated in dense, diverse states like 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 nation’s most significant disparities. These gaps don’t just reflect historical inequities—they underscore where credit unions can make a measurable difference. With many first-generation homebuyers in multicultural communities, the overlap presents a powerful opportunity for credit unions 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 member 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 Forward for Credit Unions
On paper, the difference between a “first-time” and “first-generation” homebuyer might seem small. But in practice, it changes everything—from how credit unions design products to how they engage with communities.
By acknowledging the unique challenges these members face and developing strategies rooted in data, empathy, and education, credit unions can drive growth and more importantly, lead the way in closing one of the most persistent gaps in the U.S. housing system: the ability to own a home and build wealth across generations.
In today’s lending environment, serving first-generation homebuyers isn’t just a socially responsible move. It’s a smart, future-focused growth strategy for credit unions that want to lead.
Contact iEmergent today to learn how our data and tools can help you uncover untapped lending opportunities in underserved markets and create lasting impact for your members.