#United States #Columbia #Veterans United #financial assistance #Homeownership Support

How Parental Financial Support is Shaping the Future of Homeownership

In recent years, the real estate landscape has witnessed a remarkable shift as parents increasingly step in to support their children on their journey to homeownership. According to a nationwide survey conducted by Veterans United Home Loans, about 6 in 10 parents (59%) have provided or plan to provide financial assistance to help their kids secure a home. This phenomenon, commonly referred to as the “Bank of Mom and Dad,” is more than just a trend; it reflects deep-seated economic challenges faced by the younger generation.

The Push from Parents

The survey results shed light on the motivations behind parental support. A significant 43% of parents indicated that their assistance often comes in the form of down payment contributions. This is of great importance as affordability challenges continue to make it harder for many young buyers to enter the housing market. Other common forms of support include helping children qualify for mortgage loans (37%) and covering closing costs (33%).

Chris Birk, Vice President of Mortgage Insight at Veterans United, stated, "Today’s affordability challenges are making it harder for many younger buyers to get a foothold in the housing market. For some families, that means stepping in where they can to help bridge gaps around upfront costs or qualification hurdles."

Beyond merely aiding with upfront costs, parents are also considering the long-term implications of their support. A considerable 33% of parents expressed the goal of helping their children build equity and wealth over time, while 27% hoped to enable lower monthly payments. Additionally, 25% are focused on aiding their children in purchasing homes in better neighborhoods or school districts.

Strategies Parents Use to Support Their Children

The survey indicated a variety of ways that parents are contributing to their children's home-buying efforts. The findings include:

• - 33% have offered or plan to offer down payment contributions.
• - 30% have gifted cash.
• - 30% are paying off existing debts to improve credit readiness.
• - 27% have assisted with closing costs.
• - 27% are allowing their children to live at home to save money for a down payment.
• - 25% have covered costs related to furnishings or home improvements.
• - 23% have paid for moving expenses.

Interestingly, the support often comes without stringent strings attached. The survey reveals that among parents who have provided, or plan to provide, assistance, 57% characterize this support as a gift, while 20% view it as a loan, and 23% define it as a combination of both.

Financial Contributions and the Stakes Involved

The financial implications of this parental involvement are significant. According to the survey, nearly 30% of parents have contributed or expect to contribute between $25,000 and $49,999 to their children's home buying efforts. Furthermore, 23% anticipate sending between $50,000 and $99,999, while 12% expect contributions ranging from $100,000 to $199,999.

To facilitate this financial support, parents tap into various resources:

• - 65% are utilizing checking or cash accounts.
• - 50% are drawing from investment accounts.
• - 35% leverage home equity.
• - 32% are accessing retirement accounts.
• - 27% rely on inheritance or trust funds.

In a notable turn of events, many parents are opting to take a more active role in the home-buying process. Almost 1 in 5 (18%) have co-signed a mortgage or plan to do so, while another 17% have either purchased or will purchase a home outright for their child. Some have taken it a step further by providing private loans.

Birk encapsulated the essence of this trend, stating, "At the end of the day, this is about families working together to navigate a challenging market. 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."

To learn more about the survey's findings and its methodology, visit Veterans United Home Loans' website.

About Veterans United Home Loans

Based in Columbia, Missouri, Veterans United Home Loans is a full-service national lender. In Fiscal Year 2025, the company financed over $23.8 billion in loans, claiming the title of the country's largest VA lender as stated by the Department of Veterans Affairs. The mission prioritizes equipping Veterans and service members with the home loan benefits earned through their service.