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Bank of Mom and Dad Puts Kids in Houses


New research by loanDepot LLC indicates the number of parents who expect to help their Millennial-age children purchase a home in the future will increase by 31 percent compared to the past five years, from 13 to 17 percent. Half (50%) of the parents who will help their children buy a home say they’ll contribute toward down payments, while 20 percent will cover closing costs and 20 percent will cosign the loan.

In the future, about two-thirds of parents (67%) say they they’ll use savings to help their children buy a home, compared to 72 percent in the past. The number of parents who plan to use cash from a refinance or take out a personal loan to help their children buy a home is expect to double. In the past, just 4 percent of parents refinanced their homes and 3 percent used personal loans. In the future, those numbers are expected to increase to 8 percent for parents who will refinance and 8 percent for parents who will take out a personal loan.

“Support from parents is playing a significant role in the housing recovery, and this new research indicates the trend will increase,” said Dave Norris, president and chief operations officer at loanDepot LLC. “First time home buyers comprise 28 percent of the today’s home buying market[1], an almost all-time low. Through the survey, 75 percent of Millennial-age home-buyers who received financial support from their parents said that assistance made it possible for them to buy a home. Without that financial support, it’s likely the pool of Millennial first-time home buyers would be even smaller than today.”


The loanDepot research surfaced opposing views between parents and Millennial-aged buyers about whether or not the parent’s financial support was or will be a gift, loan, inheritance or something else altogether. While most parents (68%) view the financial support as a gift, only 29 percent of Millennial-aged children agreed. More Millennials (36%) view their parent’s financial support as a loan to be repaid than as a gift (29%).

Future:  How Parents & Their Children View Obligation to Repay

Type of Support Millennials Parents
A Gift 29% 68%
Loan to be Repaid 36% 11%
Partial/Total Inheritance 7% 17%
Other 0% 3%
Don’t Expect to Receive/Give Money 19% NA
Not Sure 9% 1%



 According to the new loanDepot survey, in the future parents will rely less on personal savings to help their children buy a home and more on other options including cash proceeds from a home refinance

or taking out personal loans. In fact, parent’s reliance on personal savings will decrease by 15 percent, while in the future their reliance on personal loans and cash out refinances will double.


Future & Past: Sources of Parental Support

Sources of funds Past Five Years Future Purchases
Savings 74% 67%
Other 7% 1%
Refinance current home 4% 8%
Unsecured personal loan 3% 8%
Borrow from 401K 2% 4%
Sold/Sell Primary Residence, Used Proceeds 2% 2%
Sold Equities, Used Proceeds 8% 5%
Don’t Know 2% 5%



While more parents in the future expect to help their children buy a home, the loanDepot survey reveals parent’s financial support with down payments will shift to other options. In the past, 65 percent of parents helped their kids buy a home chipped in on the down payment, with nearly 20 percent of them paying 90 percent or more towards the down. In the future, the number of parents expecting to help with the down payment is expected to drop to 50 percent, and only 8 percent expect to contribute 90 percent of the down payment.

In the future, parents will likely be more willing to open their wallets wider to pay ‘other expenses’ or student loan debt and to welcome their boomerang children back to the nest than in the past.  In fact, one in three (30%) parents expect to pay ‘other expenses’ so their children can save money, and 18 percent expect to help pay-down student loan debt. In the past, only 11 percent of parents paid down their children’s student loan debt to save money to buy a home.

Over half (55%) of the parents expect their kids will continue living with them or said they may have them move back home to save money for that first home.

How Parents Help their Children Buy a Home

Form of Assistance Past Five Years Future Purchases[2]
Contribute to down payment 65% 50%
Paid Other Expenses So they Could Save Money 25% 30%
Help with closing costs 24% 20%
Co-sign the mortgage 21% 20%
Helped Pay Down Student Loan Debt 11% 18%
Continue to live at home to Save Money 11% 33%
Moved back home 8% 22%
Help pay their rent for a While 7% 8%

            According to the new survey, Millennials aren’t necessarily interested in getting a second job, moving in with parents or asking for cash in lieu of wedding, birthday or holiday gifts to save for a home. Cutting back on entertainment and eating out less (39%) topped the list of money-saving strategies Millennials used to save money for their first home.


How Millennials Are Saving For Down Payments

Millennials Save Like This Millennials purchased a home
Cut down on entertainment/eat out less 39%
Live with or Move Back in with Parents 16%
Worked and saved money 6%
Got second job or asked for a raise 6%
Sold personal items 5%
Asked for money instead of wedding/holiday gifts 4%
Other 4%
Took out a loan 1%
Didn’t need a down payment 1%

“Our new survey confirms most Millennials plan to own a home someday[3], and their parents are more than supportive of their efforts,” said Norris. “Their interest in homeownership will likely pick up once they start their own families, reduce debt and have been working long enough to earn a decent income and save money. As parents increase support of their children’s goals to own a home, loanDepot will increase the financing options available to help Millennials achieve their dreams.  From personal loans for debt consolidate to affordable home finance options, loanDepot remains committed to be America’s consumer lender of choice.”

This new research was completed Feb 13, 2015, for loanDepot LLC, America’s consumer lender, by GFK Custom Research North America by completing 1000 interviews with parents of Millennial-aged children and 1000 interviews of Millennial-age adults, ages 18 to 38.




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