A new poll from Newsweek suggests that Generation Z (born between 1997 and 2012) is burdened with more personal debt than any other age group.  It must be turned around.

     On average, adult Gen Zers carry $94,101 in personal debt—far surpassing Millennials ($59,181) and significantly exceeding Gen Xers ($53,255).   Credit card debt is the most common liability among Gen Z, with 56% carrying some form of it.  Yet, despite their high overall debt, only 16% of Gen Z respondents have a mortgage.  As this generation moves into prime homebuying age, what does their debt burden mean for their homebuying futures?

     Even more concerning than the sheer amount of debt Gen Z carries is their high delinquency rate. Credit card delinquency rates are also highest among this generation compared to others, according to a 2024 study from the New York Fed. While having a large debt burden is a barrier to homebuying, a history of serious delinquency (such as accounts in collections or charge offs) can be an outright deal breaker. Late payments lower credit scores and can linger on credit reports for years—even after the balance is paid—making mortgage approval much harder for prospective buyers.

     Your debt-to-income (DTI) ratio measures how much of your monthly income goes toward debt payments, helping lenders assess whether you can afford a mortgage. It’s calculated by dividing your total monthly debt payments by your gross monthly income and multiplying by 100. Generally, lenders prefer a DTI of 36% or lower, with 28% to 35% allocated to housing costs. Some lenders may approve borrowers with a DTI as high as 43%, but this is less common.  With Gen Z likely dedicating a significant portion of their monthly income to debt repayment, qualifying for a favorable DTI will remain a challenge compounded by high home prices and mortgage rates.