Why your parents should buy you a house

For millennials and members of Gen Z ready to become homeowners, things are bleak: interest rates are up, housing stock is limited, and prices remain stubbornly high. Only 49% of millennials own a home at age 35, compared to 62% of baby boomers at the same age, a study from the University of Cambridge found. The median age of first-time buyers is now 35, the second-highest since the National Association of Realtors started tracking buyer profiles in 1981. 

At the same time, boomers have $76 trillion in wealth. According to financial advisers, this is its own problem, as many struggle to transition from saving money for retirement to spending it. At some point, it’s time for such financially expedient boomers to stop scrimping, start living comfortably, and — ahem — perhaps help their children live comfortably too. 

There is a neat solution to these seemingly unrelated problems, according to Ben Carlson, a financial adviser at Ritholtz Wealth Management and the cohost of the financial-markets podcast “Animal Spirits”: parents should buy their kids houses.

“My whole premise is that boomers have way more money than they ever felt they would have at this point, and going from saver to spender is hard,” he said. “For a lot of young people, they feel like buying a house is their next step in life, and affordability levels are so bad right now.” 

Hand, meet glove. Yet it’s not so simple. From interest rates to divorce, there’s a lot to consider when buying a house. With all their experience doing it — and probably before they were 30 — boomer parents know this. Do you recognize your parents in this calculus? Here’s how you can persuade them to solve your problems as well as their own by buying you a house. 

Everyone’s doing it

More than a third of Gen Z and about a quarter of millennials have gotten financial assistance from their parents when buying a home, a recent survey from Credit Karma said. 

Daniel Cabrera, owner of Sell My House Fast, a real-estate investment and home-sales company in the San Antonio area, has seen a marked increase in parents buying their children homes. 

“I’m working on one right now,” he said. “The dad has been relentless in trying to get this done for his daughter. Every one of these has been in the past two years.”

In Cambria County, Pennsylvania, a rural area about 90 minutes outside Pittsburgh, real-estate agent Hunter Ott is helping a set of parents buy their son a house in an all-cash transaction. Ott has worked with Howard Hanna Bardell Realty since 2020 and has seen a handful of such deals since 2022. His coworkers say it’s the first time in 20 years they’ve seen parents helping their kids buy houses. 

“There’s a good uptrend of it, at least around here,” he said. 

In some markets, the practice was already common but is now growing. 

“In New York City and DC, the rents are so high, Mom and Dad come take a look and say, ‘This is bonkers. Why are you paying the owner’s mortgage?’” Andrea Saturno-Sanjana, a broker with Coldwell Banker Warburg, said. “The next question they ask is, ‘What can we buy?’”

Of course, many boomer parents can’t afford to buy their children a home outright. But they’re finding other ways to help out, like providing down payments, cosigning loans, or acting as a bank for their children and offering lower rates than today’s 6.5% average national rate for a 30-year fixed mortgage. These “intrafamily loans” are subject to applicable federal rates, which fluctuate. Today, they sit between 4 and 5%.

“I sold a $5.5 million townhouse where the parents paid cash and the children paid them back with a low-interest loan” formalized in a written agreement, said Toni Nicolo, an associate broker at Compass in New York.

According to the National Association of Realtors, 12% of buyers this year are getting help with a down payment, up from 9% last year. The latest data from Freddie Mac is from 2022, but shows an upswing from 2020 to an all-time high of 3.7% of borrowers with cosigned loans. 

“I’m seeing many more cases where parents are involved with their grown children’s purchases in various ways,” said Melissa Cohn of William Raveis Mortgage in Palm Beach, Florida. “In most cases, parents will provide a down payment or cosign a loan, which tend to be the two biggest hurdles for first-time buyers.”

It’s a great way to spend time together

When Mom and Dad are writing a five-, six-, or seven-figure check on your behalf, they may want to have some firsthand knowledge of what they’re buying. 

“Some parents give money with no strings attached, but others want to see where they are putting their money,” Nicolo said. “I have had transactions where the parents are there for the first visit through the inspection.”

You might cringe at the thought of your parents looking over your shoulder while you shop, but it doesn’t have to be painful. 

“I have family groups where the parents come in on the weekend, tour places in the morning, have lunch, and see some more places in the afternoon,” Saturno-Sanjana said. “They make it a positive and joyful experience.” 

One marketing exec from the Kansas City area is helping her daughter and son-in-law buy their first house. 

“We’ve seen every house with them and we love it,” she said. “They’re making good choices and trying to stay within their limits. And we just love the opportunity to be with them and help them make better choices.” 

The closeness doesn’t have to stop at closing. Some parents are buying houses for their kids for the express purpose of spending more time together. 

“There’s a house that’s near Mom and Dad, and they want the kids and grandkids there,” Cabrera said, adding that in the cases he’s seen, this would be impossible without financial assistance. 

He’s brokering a deal for an $850,000 house in a coveted school district. The parents found the house and are covering the $200,000 down payment. 

To them, it’s worth it: the house is directly next door. Now, the grandkids will grow up going to the same schools their parents attended. 

Grandchildren can be an extremely powerful motivator for parents buying their children a home, according to David Abrahams, a real-estate agent in Texas. “I would tell them, ‘If you help me get a house close to you, you can spend as much time as you want with little Johnny, and then I can have more date nights and make little Susie,’” he said. 

In rural Pennsylvania, Ott is working on a similar deal, helping parents buy their son a $418,000 house he could never afford. 

“The parents were involved in every aspect of the search, the reason being that the house they’re purchasing, their daughter lives to the left of it and they live to the right of it,” he said. “The family will own three houses in a row, about half the block.” 

You’re prepared

Show your parents you’ve done the homework when it comes to buying a house.

“When the adult child says, 'I’ve engaged an agent, contacted an attorney, have a home inspector and contractor lined up — will you consider this?' it will have an impact because it will make a parent think, 'My son or daughter has really thought this through,’” Saturno-Sanjana said. “Parents are impressed when their adult children present a well-prepared, business-like case for why they should receive help buying a home."

Of course, no business is a sure thing, and part of showing your parents that you’re prepared is being clear-eyed about the risks of them writing you a big, fat check so you can have a house. 

“A larger house will have more to fix, and things happen,” Abrahams said. “A 4,100-square-foot house may have three different air-conditioning units and two water heaters. What happens if they break or the roof needs to be replaced?”

Abrahams suggested coming to your parents with the idea of getting a home warranty that for less than $1,000 a year covers “damn near anything that breaks, bumper to bumper” (after a small deductible). This will give you — and them — peace of mind.  

But the biggest pitfall your parents may worry about is reliance on their money and the housing it provides.  

“We always struggle as parents not to make our kids too dependent on us,” Abrahams said. “Have I given them enough to go out in the world and learn and be successful?” 

Counterpoint: reasons your parents maybe shouldn’t buy you a house

The gift of a house from your folks might seem like a dream come true, but there are compelling reasons why it could turn into a nightmare.

For one, there’s the stark fact that about 40% of marriages end in divorce. If your parents buy you and your spouse a home, that could spell trouble. Patrick Simasko, a lawyer and financial adviser, often shares a foreboding hypothetical with his boomer clients. “When your son and his spouse buy their first house, and they need a $100,000 down payment, you give it to them,” he said. “But then they get divorced, and the son says, ‘That’s my $100,000 — my parents gave it to me.’ And the spouse’s lawyer says, ‘Eff you, buddy; you gave it to both of them.’”

Then there’s the pesky specter of aging. 

If your parents buy you property and within the next five years need to access Medicaid for elder care, the government could come after you for the money. If you can’t pay, Medicaid won’t cover the nursing-home bill. 

Finally, such a profound gift could give your parents more reason to meddle in your life.

“Some families use money as a tool of control,” said Robert Farrington, founder of the College Investor, a site focused on educating young adults about money. “You have to be mindful of these situations. There’s a big psychological component to this, and family dynamics play a role. So you have to ask yourself, is it worth it?”

For a whole new house? Well, that’s up to you.

Jeremy Greenfield has written about media, culture, health, careers, startups, and AI for The New Yorker, The Atlantic, GQ, USA Today, the Wall Street Journal, Reader's Digest magazine, Hard Pack magazine, and others.