‘The American Dream is still very much alive,’ Fannie Mae CEO insists—and she has essential advice for first-time homebuyers

Homebuying can be a defeating process for anyone—particularly younger generations battling decades-high interest rates and home prices. But homeownership can still happen for millennials and Gen Zers, Fannie Mae CEO Priscilla Almodovar told Fortune in a recent Leadership Next podcast episode.

“The American dream is still very much alive,” Almodovar said. “It might just take a little longer.”

Almodovar would know: Her parents were longtime renters, so that’s how she grew up.

“Did my parents dream of having a home? Was that home what changed the trajectory of our life? Absolutely,” she said. “And today, owning a home is still the number one way where families build generational wealth.”

Still, mortgage rates continue to hover around 7% and the average home price has surged nearly 50% on a national basis since the start of the pandemic, according to a Capital Economics note published this week. These two factors alone can make homebuying seem out-of-reach for younger generations, as well as lower-income and middle-class families. Yet, “millennials still want to be homeowners and raise a family,” Almodovar said.

“Millennials are still driving that demand,” she said. Plus, February was the third consecutive month that Fannie Mae reported in its home purchase sentiment survey that sellers are saying now might be the time to sell, even if purchasers are still pessimistic about the thought of buying a home. But consumers, according to the survey, also believe mortgage rates will come down—and “maybe this is the time I should start looking at a home,” Almodovar said.

For first-time homebuyers looking to take the plunge this spring selling season (which is looking a bit more promising this year), Almodovar shared two tips to turn renters into homeowners.

‘Fix your credit’

The average credit score in the U.S. was 715 in 2023, according to a January report by Experian, one of the major consumer credit reporting companies. But millennials average a credit score of 690, and Gen Zers come in at 680. The qualifying credit score for most conventional loans is 620, according to Rocket Mortgage.

But for prospective homeowners who don’t yet fall in that range, Almodovar suggests renters focus on improving their credit score before attempting to purchase a home.

“Fix your credit,” she said. “Having thin credit or no credit is an obstacle.”

Almodovar suggests talking to your landlord about reporting positive rent payments, which can improve your credit score. This means your landlord would report your monthly on-time payment to the credit bureaus (Equifax, Experian, and Transunion) to be included in the calculation of your consumer credit score.

“If you're a renter, see if your landlord will report your positive rent. Get that all fixed,” Almodovar said. “I think it's job number one.”

Education is key

While homeownership is considered part of the American dream, not all prospective homeowners understand what it really means to purchase and maintain a home. That’s why it’s so important to educate yourself ahead of making what will likely be the biggest purchase of your life to date.

“You have to understand what it means to be a homeowner,” Almodovar said. “So really understand the cost.”

Many first-time-homeowner lending programs now require borrowers to complete a home-buying course ahead of locking in a loan. These educational programs cover mortgage payments, responsibilities of homeownership, and more. But it’s also important to understand the landscape of your local market. Throughout the country, home prices have trended up, but there are still markets where homeownership can be more affordable.

“There’s a lot you can do,” Almodovar said. “In the meantime, just get smart about what it is to be a homeowner and save.”

This story was originally featured on Fortune.com