Dave Ramsey Shares ‘7 Baby Steps’ Young People Can Take To Avoid Being ‘Boxed Out’ of Homeownership

How can more young people afford to buy a home? 

It’s been the quintessential, million-dollar question concerning the American dream for the past few years. 

With millennials finally breaking into the market—the new average age of a first-time home buyer in 2024 was 40—the focus is turning to the generation behind them: Gen Z. 

A recent Realtor.com® survey of 1,000 adults aged 18–27 who currently own or hope to own a home found that 82% of respondents believe it’s harder for their generation to buy a home compared to previous ones, and 16% say housing affordability is among their highest concerns.

So what can young people do to achieve homeownership? The latest advice comes from financial expert Dave Ramsey, who recently shared his seven “baby step” strategy to manage debt, perhaps the most crucial maneuver to afford a home. 

The American dream is not dead for young people, Ramsey says

"If I'm sitting there in my twenties and I want to buy a house and I feel like I've been boxed out right now, the facts are that that's true," said the Ramsey Solutions founder on "America Reports." 

"The facts are there's a problem. And I can't control those facts, but I can control my reaction to them. So the only way you win with money is to control the controllables."

According to Ramsey, the objective is not to wait for the rates to fall below 6%, but rather make sure you're financially secure enough to own a home in the first place. 

On the program, he laid out his "7 Baby Steps To Take Control of Your Money," which starts with steps like saving $1,000 for an emergency fund and building a savings cushion of three to six months of expenses.

The next crucial step is to get yourself out of debt, paying off credit cards and student loans. However, this rule doesn’t apply to a mortgage, if you’ve already managed to snag one. 

After completing those first three steps, the next four are based on making money moves for the future, which include owning a home. 

He first recommends investing 15% of your household income into retirement, which is key if you’ll be owning a home in your later years. Once your home has been secured, he also recommends paying off your home early. For years, Dave recommended to his readers that a 15-year mortgage is the way to go over a 30-year mortgage, aligning with his constraint of keeping debt off the table. 

Lastly, his final steps include saving early for your child’s college fund and once all those buckets are filled building wealth and giving it away to others.

"The American dream is not dead, but it feels like it to a lot of people right now," he insisted. 

And he’s not wrong. 

Gen Z is saving for the future 

Despite the challenges facing them in the housing market, Gen Z respondents who spoke to Realtor.com are still taking action to save for homeownership. Nearly three-quarters have started saving for a down payment, estimating they’ll need an average of $54,500.

Interestingly, many respondents aligned with Ramsey’s slow and steady approach to saving as well, as the survey suggested that Gen Z who are or who hope to become homeowners favor “dependable strategies over riskier ones”—and few are willing to invest in crypto or rely on risky stock gains. 

They’re also willing to put in the work: Roughly a third of respondents have before or are currently working a second job or side hustle to save up for a down payment and even fewer plan to borrow from family. This is a departure from the generation before them. As according to a new survey by Northwestern Mutual, nearly 7 out of 10 millennials are counting on that inheritance to plan their own futures, including buying a home.