We’ve all heard the advice that if millennials would just give up their avocado toast they’d have enough money to buy a home. The fact is they are grappling with much more significant financial barriers such as student loans, rising rents, the high cost of living, and stagnant income growth.

As a real estate agent, here are a few ways you can help a millennial buyer on their path towards ownership.

Erin Lowry, the author of Broke Millennial, says millennials need to have a handle on their overall finances before they consider purchasing a home. This includes having a budget, emergency savings, a debt-reduction plan, and at least one way to bring in additional income each month.

“You have to have a budget,” Lowry told Inman. “People hate to hear it, but you need to know how much money is coming in and how much is going out.”

Lowry noted it’s important to understand that budgeting just isn’t about cutting expenses, but also finding ways to increase your income. She suggests negotiating a raise at your yearly performance review, consider moving to a company that offers a higher starting salary, pick up a second job, or monetize a talent or hobby.

“There’s only so much you can cut,” she added.

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From there, Lowry said millennials should funnel that extra income toward aggressive saving and debt pay-off plans. When it comes to savings, she recommends enough cash to cover 3 to 6 months of expenses.”

“In fact, I would even recommend that you have an additional emergency savings fund that’s just for your house,” Lowry added. “It doesn’t have to be 3 to 6 months of living expenses, but a lump sum of money set aside for when your home needs an extensive repair or renovation .”

On the debt front, Lowry said the single most effective thing millennials can do is to pay more than the minimum amount each month. “Paying an extra $10 a month makes a difference in this situation but you need to make sure it’s being applied to your principal balance.”

“Also, always know exactly how much money you owe, the interest rates, what the minimum payments are and your current timeline for repayment,” she said.

“A lot of Millennials think you need to have more for a down payment than you actually do,” said Zach Walkerlieb, a millennial real estate agent at Las Vegas-based Coldwell Banker Premier Realty. “I think the misconception is that you need to have 20 percent.”

Walkerlieb says millennials often don’t know about loan options that require as little as three percent down, which for example, would reduce a $40,000 down payment for a $200,000 home to $6,000 — a much more manageable amount.

He recommends that buyers consider conventional loan options with low down payments, such as Fannie Mae’s non-FHA backed HomeReady mortgage and Conventional 97. With these loans, buyers can put down as little as three percent but must pay a monthly mortgage insurance premium (MIP) until 20 percent of the loan is paid off.

If a buyer isn’t able to qualify for a conventional loan, Walkerlieb suggests trying to secure a Federal Housing Administration (FHA) loan. This requires buyers to put down 3.5 percent and like low-down-payment conventional options, buyers will have to pay a monthly MIP, except there’s one major caveat.

“FHA has mortgage insurance [premium] for the life of the loan, which is to be paid every month and it never goes away,” he said, noting that it shouldn’t be the first choice. “It doesn’t go towards your equity and it doesn’t go towards your property,” he added.

Before going the FHA route, Walkerlieb said millennials should take a look at down payment assistance programs and grants.  Both of these options can provide enough funds to allow you to put down 10 percent of the cost. Although grants do not need to be repaid, if you were to receive a loan, you have 3-5 years to pay it off.

Down Payment Resource CEO Rob Chrane says there are more than 2,500 down payment assistance programs nationwide, and it’s important that real estate agents understand the requirements and the ways those programs can be “layered,” so buyers can get the maximum amount of help.

Chrane says the eligibility often relird on two things: the household’s size and income and the home’s purchase price. Often times, programs only take applicants that don’t make more than 80 percent of the area median income, he said.

But, those standards are gradually changing as affordability weakens.

“As affordability and saving for a down payment become a bigger problem, those limits for some programs have been increased,” Chrane told Inman. “It’s not uncommon to see a person making 100 percent or 120 percent of area median income and qualifying for help.”

He also says that some programs make income exemptions for protectors (e.g., police and fire), educators, health care workers, active military, and veterans.

Furthermore, Chrane says older millennials who may have lost a previous home to foreclosure or short sale should still apply for down payment programs, even if there’s a first-time buyer requirement.

“Some people will read that and say, ‘Oh I owned a home a long time ago, so I can’t qualify for that,’ ” he said. “Where they do have a first-time homebuyer requirement, they’re usually using HUD’s definition of a first-time homebuyer which means that you haven’t owned a home in the last three years.”

Lowry says millennials need to remember that saving for a down payment takes time and that your savings strategy will depend on your individual goals.

“I would recommend starting a minimum of a year or two years out from when you want to buy just to give yourself some nice runway,” she said. “If you’re only a few years out, this money should not be invested. It needs to be in a savings account, it needs to be liquid and there needs to be no threat of it going down.”

“If you’re thinking 10 years down the road and you have an ok risk tolerance, you could consider investing some of that money for the first few years and if it’s earned a nice return, sell the investment and put it in savings account as you start to approach time when you want to buy your house,” she suggested. “Once you get within a 5-year range, I wouldn’t put any risk on that money.”

Email Marian McPherson.

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