Gen Z’s “Shadow Debt” Could Make Buying a Home Even Harder

It starts innocently enough… You put the concert tickets on your credit card, your friend books the Airbnb, and someone else covers dinner. 

Everyone promises to settle up later. Except “later” turns into next payday. Then next month. Before long, not only are you floating your friends, you’re carrying debt for them.

New Zelle research calls this informal financial burden “shadow debt,” and it appears to be hitting Gen Z particularly hard. Nearly half of Gen Z respondents said they’ve gone into debt to cover group expenses, while 76% of those who fronted money said they weren’t fully repaid.

Those lingering balances can do more than just erode friendships. They can also quietly weaken the same numbers mortgage lenders use to decide whether you’re ready to buy a home.

Gen Z’s newest debt problem isn’t just student loans

It’s no secret that group experiences (and hanging out with friends in general) are getting expensive. According to Zelle, 37% of Gen Z respondents spent at least $2,501 per person on major trips and events. That’s the highest share of any generation.

And repayment is not always quick. Among Gen Z borrowers, 18% said paying someone back can take up to a month, 10% said two to six months, and 11% said more than six months.

That leaves whoever booked the flight, hotel, festival passes, or dinner reservation holding the bag in the meantime. If those costs were charged to a credit card, interest can start accumulating long before the Venmo or Zelle payment arrives.

And in some cases, it may never arrive at all.

Mortgage lenders only see the balance

This shadow debt can become particularly tricky if you have plans to take out a mortgage (or any loan for that matter). Your friends may owe you $1,000, but a mortgage lender doesn’t count that promise as an asset. It sees the credit card balance and required monthly payment currently attached to your name.

“If you used credit cards while waiting for friends to pay you back, shadow debt can absolutely turn into a MORTGAGE PROBLEM,” says Lisa Lund, a mortgage broker and financing expert with Lund Mortgage Team.

“More revolving balances can raise your credit utilization and hurt your credit score, driving monthly debt payments up, which may also impact your debt-to-income ratio and borrowing capacity as well. Lenders typically look at the debt you’re responsible for today, as opposed to the cash your friends plan on repaying in the future.”

Higher credit utilization may pull down your credit score. Larger minimum payments can increase your debt-to-income ratio. Both can affect which mortgages are available, how much you’re approved to borrow, and the rate you receive.

Gen Z buyers already have little margin for error

Shared expenses aren’t why housing is unaffordable. You have to look at inflation, a stagnant job market, high mortgage rates, and other factors.

However, these shared expenses can make an already-steep climb even harder.

Gen Z accounted for only 4% of recent homebuyers, according to the National Association of Realtors. Meanwhile, first-time buyers fell to a record-low 21% of the market, and their median age reached 40 in 2025.

Realtor.com® research found a record 25.2 million adults under 35 were living with their parents in 2025, with 7 in 10 employed. The consensus is that housing costs are keeping many young adults from living independently. It’s not just a lack of jobs. 

Saving the upfront cash for a down payment takes longer, too. Realtor.com research found that the typical down payment now requires about 9.7 years of saving, up from 3.2 years in 1990, as home prices have risen far faster than incomes.

Against that backdrop, regularly floating $200 dinners, $800 concert tickets, or a $2,500 group trip could mean money that never reaches a down payment or emergency fund.

“The greatest challenge is not a high-priced buy; it is irregular saving,” Lund says. “Those who save consistently and automatically for their home often reach their milestones earlier, even if they still like to go out occasionally.”

Stop being the group’s unofficial bank

For any Gen Zers out there, spending money by hanging out with friends isn’t the problem — and neither is avocado toast. But in a housing market where saving a down payment can take close to a decade, floating your friends may cost more than a little lost interest. 

You don’t need to stay home forever or abandon your friends. But if you’re hoping to buy a home within the next year, Lund recommends avoiding large shared charges unless you could comfortably cover the entire bill yourself.

You could also try these tips to avoid shadow debt:

• Request payments from everyone before you book tickets or accommodations.

• Set a monthly spending limit for trips, dinners, and events (and try to stick to it).

• Decline to put the full group expense on your credit card.

• Automate a separate home savings transfer before spending socially.

• Tell friends directly when a plan doesn’t fit your homebuying budget. (This can be awkward, but if they’re your true friends, they’ll understand.)

“More than you might think, people respect ‘I’m saving for a house’ as an excuse,” Lund says.