The next generation’s route to homeownership is increasingly influenced by their parents, according to a new survey by Veterans United Home Loans. As indicated by recent data, around 6 out of 10 parents (59%) have given or want to give their child financial support so they can own a property.
In today’s housing market, families are stepping in to help overcome financial issues, which is an increasing trend, according to the report. Compared to 49% of civilians, some 68% of veterans and service members say they have helped or want to help, indicating that support is particularly prevalent among the military community. According to the research, many parents view financial assistance as both generous and increasingly important in the housing situation.
“Today’s affordability challenges are making it harder for many younger buyers to get a foothold in the housing market,” said Chris Birk, VP of Mortgage Insight at Veterans United. “For some families, that means stepping in where they can to help bridge gaps around upfront costs or qualification hurdles, even if it means stretching their own finances or making sacrifices elsewhere.”
According to 43% of respondents, the most frequent reason parents intervene is to assist with a down payment. An estimated 33% mentioned paying closing expenses, and another 37% stated they wanted to assist their child in getting a mortgage.
The findings highlight two of the most significant obstacles to becoming a homeowner: fulfilling loan requirements and saving enough money up front. However, a lot of parents are also considering the long term. While 27% want to lower monthly payments, a third (33%) indicated they want to assist their child in developing equity and long-term wealth. Roughly 25% expressed a desire to assist their child in buying a property in a better area or school district.
Parents Providing Financial Support for Housing Costs
In order to support their children, parents are employing a variety of tactics, with direct financial donations setting the standard:
- 33% have provided or plan to provide a down payment contribution
- 30% are gifting cash
- 30% are paying off debt to improve buying readiness
- 27% are assisting with closing costs
- 27% are allowing children to live at home to save
- 25% are covering furnishings or home improvements
- 23% are paying moving expenses
Per the survey, that financial help frequently comes with no conditions, for example, kids having to pay their parents back. Of parents who have assisted or want to assist, 57% define the support as a gift, 20% as a loan, and 23% as a mix of the two.
Additionally, there are frequently large financial stakes. Of the parents surveyed, some 23% intend to donate between $50,000 and $99,999, and 30% say they have donated or plan to contribute between $25,000 and $49,999. A further 12% anticipate making contributions in the range of $100,000 to $199,999, with smaller fractions intending even greater sums.
Parents are using a range of resources to pay for that assistance:
- 65% are using checking or cash accounts
- 50% are drawing from investment accounts
- 35% are leveraging home equity
- 32% are using retirement accounts
- 27% are relying on inheritance or trust funds
“At the end of the day, this is about families working together to navigate a challenging market,” Birk said. “For parents who are in a position to help, it can be a powerful way to open the door to homeownership sooner and set up their children with a stronger financial foundation for the future.”
Some parents are becoming even more involved in the process of purchasing a property. Approximately 1 in 5 people (18%) have co-signed a mortgage or intend to do so. Another 17% have bought or intend to buy a house for their child outright, and the same percentage have given or intend to give a private loan.
To read the full report, click here.
