Why it’s so hard to save for a house. One factor: car-loan debt.

Aspiring homeowners find that saving for a down payment is one of the biggest hurdles stopping them from buying their dream home, or any home, for that matter, according to a new report.

As home prices continue to grow —  the median-priced home is now about $400,000 — home buyers today are seeing the amount of money they need to put down on a home rise steadily.

Consequently, 38% of first-time home buyers said that saving for a down payment was the most difficult step in the home buying process, according a new report from National Association of Realtors. 

Related: Home buyers are making record down payments. But there are ways to put down as little as 1%.

Among first-time buyers, the top three reasons they gave for being unable to save for a down payment were: high monthly rent or mortgage payment (56%); student-loan debt (45%);  and auto-loan debt (38%), according to the NAR’s 2023 Profile of Home Buyers & Sellers, released Monday.

The report found that the typical down payment for first-time buyers was 8%. That’s roughly $32,000 for a median-priced home of $400,000. The median price is the price in the middle of the price ladder; half of homes are cheaper, half are more expensive.

Repeat buyers didn’t face as much of a struggle when coming up with a down payment, with just 7% indicating it was difficult to do so, according to the NAR survey. Repeat buyers have the additional benefit of tapping into the proceeds from the sale of their previous home to fund a new purchase.

For the small share of repeat buyers who found saving for a down payment challenging, the majority also cited high rents or mortgage payments, as well as credit-card debt and student-loan debt, as preventing them from saving. 

Debt also holds buyers back when it comes to getting approved for a mortgage. Nearly half of prospective buyers who were rejected for a mortgage said their application was denied because they had too much debt relative to their income, the NAR report found.

Nearly 40% of first-time buyers said they had student debt in the NAR survey, and 16% of repeat buyers said they did. The median amount of student debt held by both groups was $30,000. 

Even though payments on student loans were paused during the pandemic and only recently restarted, buyers continued to factor student debt payments into their calculations when planning for a home purchase, Jessica Lautz, deputy chief economist and vice president of research at the NAR, told MarketWatch.

“It’s just part of the overall calculation of how it’s so difficult to just save for a home. Also, the pause was temporary and so people may have had the expectation that ‘Oh, I need to pay it again in the next month,’ and then it was extended, and then extended again,” Lautz said.

Auto-loan debt is another major factor stopping buyers from being able to save for a down payment. The share of car buyers who have monthly auto payments of $1,000 or more hit a record 17.5% in the third quarter, up from the previous high of 17.1% in the second quarter, according to Edmunds. 

Home buyers that paid down debt while saving for a down payment waited for a median of four years to make their home purchase, NAR said.

Most first-time buyers said they made sacrifices to afford their home purchases, most commonly by cutting spending on “luxury goods,” entertainment and clothes, according to the report.

See also: The 5 most common reasons home buyers get rejected for a mortgage

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