Zillow’s fourth-annual consumer survey analyzes how medical and student debt is causing consumers to delay buying a home.

Personal debt is greatly impacting consumers’ ability to afford an adequate down payment or get approved for a mortgage, according to the fourth annual Zillow Group Report on Consumer Housing Trends, released Monday.

The survey found that aspiring homebuyers with medical debt are more likely to be denied when applying for financing, while those with student debt are more likely to put off buying because they can’t save for a downpayment.

“When we focus on low unemployment and the strong economy, we often forget that in many ways the rising costs of life can erode most of those gains,” Skylar Olsen, Zillow’s director of economic research said in a statement.

“Health care has never been more expensive,” Olsen added. “Getting a college degree, a path more likely to lead to economic success for those able to get through it, has never been more expensive. U.S. housing values and rents have never been more expensive. While incomes, both at the high and low end, are growing, the pace hasn’t kept up with those crucial life expenses. That’s fact and Americans are feeling it.”

An estimated two-thirds of buyers with any sort of personal debt – ie: credit card, medical or student – only put down less than 20 percent when they are getting a mortgage, compared to 40 percent of those without any debt. Student debt puts the biggest crunch on hitting that 20 percent downpayment threshold, with 76 percent of individuals unable to put down 20 percent if they have student debt.

Renters are also running into financial difficulties associated with debt. More than two-thirds of renters have debt and 25 percent of renters and homebuyers reported that their debt caused them to be denied a rental agreement or mortgage, the most common being those with medical debt. An estimated 44 percent of individuals with medical debt said they couldn’t cover an unforeseen $1,000 expense.

Debt isn’t just holding back homebuyers, it’s forcing them to make sacrifices in order to secure a home sometime in the future. Zillow’s study said that 73 percent of renters and 68 percent of buyers with debt said they made at least one financial sacrifice – the most common being entertainment – to afford their home.

Both Elizabeth Warren and Bernie Sanders are running for president on platforms that would eliminate a good portion of the nation’s debt. Sanders wants to cancel all medical debt and all student debt that was guaranteed by the federal government, while a Redfin analysis found that Warren’s plan would help millennial homebuyers afford a home three years more quickly.

Email Patrick Kearns

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