Parents helping their adult children buy homes: Raising the bar on good parenting?

In My Humble Opinion
1

Just read this article:

Millennials getting help buying homes from their (rich) parents

My thoughts:

The article makes it sound like this is a “rich people thing”. But I don’t think it is that uncommon for middle-class parents to help their adult children buy homes. My middle-class parents did this for my eldest sibling back in the 80s. And heaps of working-class and middle-class people live in homes they inherited from family members, that they couldn’t have afforded on their own. So this really isn’t a new thing, not even among “average” people.

But I do wonder how this fits into the greater narrative about setting your kids up for success. Parents are already on the hook for so much nowadays. It almost seems like the stakes are getting so high that there is little room for “tough love” parenting anymore. If you want your kid to avoid a fate at the bottom rungs of society, you can’t trust them to pull themselves up by their bootstraps. You’ve got to at least pull them halfway there.

I worry that some parents, under all this crazy pressure to do the very best for their kids, will bankrupt themselves.

What do you think?

2

I also don’t think its new, even among middle class people. I know a lot of people who moved into their parents homes when their parents moved somewhere smaller. I know a lot of people who have gotten downpayments as wedding gifts…not on huge McMansions, but on starter homes.

But I don’t think anyone should be pressured to bankrupt themselves setting their kids up for success. And I don’t really worry about it. I’ve seen very few parents overextend themselves with student loans - their kids? They are overextended. Them, nope.

3

I don’t think it’s new, either. My wife’s parents gave her the downpayment for her first house back in 1978.

I will have no problem turning my kids down should they ever ask me.

4

Their is an old saying “give with a warm hand”. Meaning giving your inheritance away while your still young and able to see the person enjoy it. Giving money for a down payment is to me just a kind of early inheritance. Many parents had help themselves so why not help out the next generation get started.

Now after that first down payment its still up to the kids to pay the monthly mortgage and keep the place up.

5

My middle-class parents (school teachers) gave me a down payment (25%), and I got hammered for it in this forum. Private Mortgage Insurance is a huge waste, if you can avoid it, so it makes sense to help a kid out IF you can give it painlessly.

It would be ridiculous for parents to give money they can’t afford, just to keep up with the Joneses.

But I don’t think it’s a “rich” thing. FWIW, my maternal grandmother gave my parents a 25% down payment in 1965, and she was an autoworker.

6

I think helping your kids with a down payment is common, and isn’t about rich parents. I helped my daughter, and I was just a public school teacher. I think rich parents buy the house for the kids, not just give the down payment. I know of a couple people who did that, but that was in the 60s and 70s.

7

Back when interest rates were high my father-in-law lent us some money for the mortgage. It was all recorded. Back then it was a good rate, but we paid him better than market rates for years, which was fine with me since my wife is an only child and it will come back to us at some point. My father did this also for our first house.

Of course you have to trust your kids to keep up the payments. If you do, everyone can win.

ETA: I wonder what they define as rich? Neither set of parents were.

8

My wife and I are 41 years old, both make decent, if not great money, and there’s no way we can afford a place of our own in the absolutely insane current market. So yeah, our (upper middle class) parents are going to help us with the down payment. Hopefully, 20-30 years from now, we’ll be able to do the same for our kid.

9

Over here in the UK, inheritance tax cuts in at a much lower point than in the US - £325K vs $5M - so it makes good financial sense to spend or give away your money before the government gets 40% of it.

10

My mother helped me with a down payment this summer - I could buy, or I could move to a new rental in an area I was less happy with rent that would have been at least 2/5 more than what I’m now paying for my mortgage (and it would likely have been closer to double my mortgage).

Affording the mortgage payments isn’t an issue at all, but between student loan payments, rent, and other bills, pulling together the down payment would have been very difficult on my own. I’m 41, fwiw.

11

I wouldn’t say that having parents help with, or pay college tuition outright is a “rich parents” thing, especially at state schools. Or at least it wasn’t a rich parents thing back in the 90s when I went to college.

However, most people I knew didn’t get help buying their houses, primarily because most of us didn’t actually get houses until our early-mid 30s at the earliest, and by that point, we’d been on our own for a good long while. At most, someone without adequate credit may have had a parent co-sign on their mortgage.

12

For those who received parental assistance with home-buying…

Do you plan to do the same for your children (if you have them)?

Do you think that a parent who declines to help their children buy a home (and of course could afford to do so) is being irresponsible or negligent?

If a parent has limited resources and/or wants to limit how much money they throw at their of-age offspring, which of the following makes more financial sense? Helping a kid with college tuition at a top notch university or helping them to buy a house in an appreciating neighborhood?

13

I didn’t specifically get a down payment, but when I was born my parents began a college fund for me (with the help of my grandfather). I ended up not needing the fund for college (scholarships and a job got me through debt-free), so I ended up using that “college fund” as part of the down payment on my first house.

I think middle class parents putting some savings away for their young children is fairly common, but whether it turns into college money, a down payment on a house, or the first car is up to the kid.

14

I’m technically on the oldest edge of the Millennials, though I feel like those a few years older and younger are kind of lost between the stereotypes of Gen-X and the Millennials. That said, I definitely see a lot of these kinds of issues facing me and my peers. I got some help from my parents for some of my school, but I paid for most of it myself either directly or with tuition reimbursement from my work (the reimbursement was primarily for grad school). But with rising tuition prices, it seems increasingly difficult for kids these days to get a good education without a lot of help.

And particularly when it comes to housing, the market is just crushing. I make pretty good money, but with rent going up, housing prices going up, and cost of living, it’s becoming increasingly difficult to try to jump from renting to buying. I had some savings, but with the unstable economy, I had to burn through most of it. How can I save up for a down payment when rent prices are HIGHER than a mortgage would be on the same place? In order to buy now, I have to rebuild up my savings, while paying increasing rent prices, before I can get a mortgage and really start saving money. It’s like a chicken or the egg problem. If I could get some money toward a down payment from my parents, it would go a LONG way toward setting me up for success, as I would not only start saving money each month on a mortgage vs rent, but I would start building equity in a home rather than just putting money in the pocket of my landlord.

One of my parents, my mom, has started to take on the idea that she’d rather start to give away what my brothers and I will inherit, to some extent, while she’s still alive, not only so that she can help us now, when we need it, rather than later when we may or may not, but she can give it with advice and all. The thing is, at least for parents and others of their generation, when they first bough houses decades ago, it was much more affordable and they’ve had those years to build equity so they could get progressively more expensive properties. For me, even a “starter” place is relatively more expensive than a home they bought when I was young and they were about the age I am now AND they already had equity toward it.

It seems to me that rising housing costs are every bit as crippling to younger generations as education costs, and if parents can afford to help their kids with it and not hurt their retirement too much, I think they should.

15

All this time, growing up until now, I thought I’d been raised in the middle class.

Based on this thread, I don’t think we were. We must have been lower class.

My parents wouldn’t even shit out one lousy dime for our college educations. Hell, my parents wouldn’t shell out for fucking braces. Nevermind, when I got to my early 30s and decided nobody would rent to me with four animals, so I bought a house.

I still haven’t gotten the braces yet. I should do that though…

Anyway, I just cannot wrap my brain around parents having the wherewithal to just fork over a house downpayment. My parents must have been a half step away from being homeless all that time.

16

I think the resentment you’re feeling is completely understandable.

I was raised in a middle-class household. My parents covered my lodging expenses while I was in college, but I was on my own with college tuition and living expenses (which thankfully were all covered by scholarships).

I just bought a house after fifteen years of renting. During that time, my mother urged me to buy buy BUY, but never offered me any help with the downpayment. Perhaps if I’d had some assistance, it wouldn’t have taken me that long. She helped my sister with a downpayment back in the day. But I’m guessing that help amounted to a couple of thousand dollars, if that much.

My hypothesis: my parents are working-class folks with a middle-class income. No one in their families ever gave them a big financial boost into adulthood, so they feel no obligation to do this with their children. Since none of us kids are mired in poverty, I’m guessing they would say they didn’t do anything wrong.

I wonder how long it will be before “you’re grown now–no more money for you” is seen as bad parenting.

17

I borrowed 2/3 of my downpayment from my grandpa, and paid him off chunks at a time. He trusted me but he did have his banker brother-in-law write up something for us to both sign. I didn’t have to pay interest but I did send him a lovely letter with each monthly payment :slight_smile:

IIRC my parents gave me the other $5k free and clear. I think I had $3k saved up but I used it for other costs.

We grew up lower class but by the time I was in my late teens, both mom and dad had been promoted high enough for us to be comfortably middle class. So they knew how to be frugal and knew how to be generous.

I’m not really sure what my friends have done (we’re all in our late 30s). I know the one girl I consider “from a privileged background” did get her downpayment from her parents.

18

I suspect that something like 80% of Americans consider themselves “middle class”, which covers a fairly broad range of income and equity.

19

I don’t have children, and have no plans for them, so that’s not applicable. If I did have children and I was in a position to help, I would.

No, I don’t think it’s irresponsible or negligent. I’m very lucky that my mother is in a place where she could offer: there were many years where it wouldn’t have been a possibility, and if she had not offered, I wouldn’t have dreamed of asking. I had a hard time accepting it as it was.

For your last question, I’m not sure, and I think the answer is: it depends. I lean toward the house being the better option, but that’s based on the assumption that the offspring is grown, fairly stable in their career (so they are able to pay the mortgage themself) and stable in their location.

20

Kid one and husband will have plenty of money when they are at a stage where they want to buy. Kid two and husband are making less, but they have lots saved and great credit. We’d help if needed.

We fully paid both their colleges, so they are college debt free. Our parents paid for ours, (almost) so it is paying it forward in a sense.

No, this is optional. Nice to do, but not required.

College. The payback is much greater. I’d never say anything, but I know some parents who force their kids to go to community college because they can’t afford even a not very expensive state school, but buy themselves new cars every year.