65% of parents say they're happy to help out
Around 77% of the millennial and Gen-Z cohorts turn to the bank of mom and dad when buying their first home, according to a recent survey from loanDepot.
The research also found that one in four respondents had no plans to purchase a home. Of those,] 61% said that their interest in buying one would increase if their parents helped them.
More than half (65%) of parents aged 39 or older said they were willing to help their children buy a home. However, 76% of those parents had not, to date, provided financial support.
Providing that support can come at a high price. Eighteen percent of parents with plans to help their children had to put their retirement on hold. Moreover, one in four parents whose children still live at their home said their life and retirement were on pause as a result.
The financial assistance and the kind of help these potential first-time homebuyers expect varies, according to loanDepot. The most common expectations were help with a down payment (38%), co-signing the mortgage (31%), and helping with closing costs (24%). A majority of people who needed down-payment assistance were searching for less than $10,000, while 19% were looking for $10,000 or more.
"I think that what this data points to is that the desire to own a home of your own has not changed over generations," said John Bianchi, executive vice president and national production manager at loanDepot. "But what has changed significantly is the array of loan options available today, both in loan types and down-payment requirements."
Additionally, many millennials delay entering the market and want to buy a permanent home as their first home instead of taking a starter home. Around 66% of respondents would prefer to hold off for a permanent home, compared to 35% of those who would purchase a starter home.
"One persistent misconception is that a 20% down payment is needed to purchase a home, and that could be factoring into some of this purchase planning," Bianchi said. "The truth is, there are many excellent ways that millennials can get into a home. I'd recommend starting any search by consulting with an experienced mortgage loan officer for advice, ideally one with local knowledge of their area."
